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July 10, 2024
The Way People Value Carbon Credit Vintages is Wrong. Here’s Why.
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Carbon credits have become an increasingly necessary tool in the fight against climate change. There is a 22 gigatonne emissions gap (i.e., the difference between projected global emissions and the emissions levels necessary to stay under 1.5 degrees C). Carbon credits funnel resources toward carbon innovation while mitigating the effects of difficult-to-decarbonize sectors. However, as all sustainability professionals know, not all carbon credits are created equal.

 

Today’s carbon credit buyers tend to prefer newly issued carbon credits and future carbon credits, which represent emissions reductions that have yet to take place, over older credits. The term that distinguishes these credits is their “vintage” year. At Boomitra, we believe that this default valuation of vintages is skewed. To better understand our argument, let’s turn our attention toward another industry: wine. Some professionals have likened nature-based carbon credit vintages to wine vintages, and we agree.

 

What are carbon credit vintages?

 

A carbon credit’s “vintage” is the year it was generated—a vintage refers to the year when emissions reductions or removals took place. If a farmer converted to regenerative ranching in 2020 and subsequently sequestered an additional 1 tonne of carbon in their soil that year, Boomitra would produce one carbon credit with a 2020 vintage.

 

Why the wine analogy?

 

The best wine connoisseurs diversify their cellars with a mix of young and aged wines. They balance the bright freshness of new wines with the complex sophistication of old wines. Their wines have different terroirs (how a particular region’s climate, soils and terrain affect the taste of wine), with different varietals and ages.

 

Credit buyers should channel their inner wine collectors: carbon credit portfolios should be like the best wine cellars, diverse in many ways, and safely stored.

 

1. Proper Storage

 

Fine wines require precise conditions–controlled temperature, humidity, and light–to enhance their flavors and mature gracefully. Carbon credits must also be carefully managed to ensure their integrity and effectiveness. A carbon credit without proper storage cannot authentically contribute to climate goals, so permanence is an essential component for buyers to review.

 

Whereas freshly issued nature-based credits still need to prove their permanence (i.e., long-term storage), older vintages have already demonstrated their capacity to durably secure carbon. An older vintage carbon project has proven its success over time by undergoing rigorous validation processes and providing a proven history of compliance. This transparency is exceptionally valuable, since carbon credit buyers and their company shareholders seek out high-integrity credits.

 

So, as with wines, older age in vintages reflects a reliability and sophistication that should be part of any collection.

 

2. Diversified Selection

 

Like stock investors and wine collectors, carbon credit buyers’ top priority for their portfolios should be diversity. Carbon credit diversification allows buyers to manage risk, optimize returns, and remain strategically flexible. Balancing between different types of credits, different geographies, different regulatory bodies, and different ages will ensure a safe and agile balance between risk and impact.

 

A carbon credit portfolio with only young credits would certainly represent cutting-edge climate solutions verified with newer methodologies—but it would also be volatile, with more uncertainty and decreased financial value compared to a more diverse portfolio. A portfolio with older vintages, on the other hand, offers a well-documented track record of permanence, compliance with standards, and rigorous verification.

 

Curating a diverse collection of carbon credits protects against volatility and uncertainty while supporting a more comprehensive range of climate initiatives. A strategic mix of carbon credit ages will ensure a robust and effective carbon strategy.

 

3. The right vintage for the moment

 

No wine connoisseur would assume that an older vintage automatically makes for better wine. Context matters—terroir, each year’s environmental conditions, the connoisseur’s own tastes. In the same way, carbon credit vintages are no proxy for quality.

 

There is no expiration date for credits that are additional and permanent with high-quality verification.

 

Carbon removal age is one piece of information that should be evaluated alongside other information: what are the co-benefits of the credit, who benefits from the sale of the credit, and what components of carbon removal credits do you, the buyer, prioritize? Many buyers’ sustainability strategies hinge on contemporaneous offsetting: older vintages allow you to go back in time, directly removing emissions from the same year that they took place.

 

Why have companies been focused on future vintages?

 

1. Vintages are incorrectly used as a proxy for quality

 

Typical buyer sentiment assumes that older vintages are lower in quality than newer vintages. For example, buyers could assume that carbon sequestration measurement has improved over time. However, Boomitra’s proprietary remote sensing technology delivers accurate and conservative measurements, regardless of the vintage year.

 

Buyers might also assume that because verification methodologies have improved over time and regulatory bodies have solidified, older vintages are less robust. However, Boomitra holds all our projects to the highest standards, beyond what is required by regulatory bodies, from our inaugural project in Mexico, to our newest project in Mongolia.

 

2. Newer vintages are assumed to more directly address global climate goals

 

Since the UNEP reported that GHG emissions need to drop 7.6% annually in order to limit warming to 1.5 degrees C, some folks have argued that older credit projects aren’t actively contributing to this goal. They say that the focus should be on present-day and future reductions/removals. However, purchasing older vintage credits certainly does make an impact today.

 

The complex and necessary third-party verification process often takes over a year. As a result, many older vintages have only recently become available for sale after undergoing rigorous testing to meet global standards. These credits haven’t been gathering dust and expiring; they’re part of ongoing, growing projects that produce credits from multiple vintages simultaneously. For example, Boomitra’s Northern Mexico Grassland Restoration project offers vintages from 2019 to 2024, all of which contribute to restoring degraded ranchlands.

 

Like all high-integrity carbon projects, the carbon removal from Boomitra’s projects would not have occurred without carbon finance.

 

3. Newer vintages are assumed to better channel funds towards companies that are actively innovating, using climate finance to drive future solutions

 

If a pillar of carbon credits is their ability to drive billions of dollars towards climate solution innovation, shouldn’t credit buyers prioritize innovative credits?

 

Boomitra is, at its core, an innovation machine. Our technology has revolutionized the soil carbon industry. And even as an industry leader, Boomitra has remained agile and true to the trailblazing mission of an early-stage startup.

 

Secondly, we believe that carbon finance does much more than fund innovation. We’re driving climate finance in the Global South, where it can build climate resilience and food security during a time of widespread catastrophe and inequality.

 

Your wine collection with Boomitra

 

There is an aphorism among wine enthusiasts: “good producers make good wine in all vintages.”  Boomitra proves that it applies to the carbon credit industry, too. Our credits, with vintages from 2019 to 2024 and futures from 2025 to 2039, have a proven track record of integrity and transparency. Our strong relationships with partners, farmers, and ranchers further demonstrate our commitment to these values.

 

Whether you are interested in the stability of an older vintage or the innovation of a newer vintage, Boomitra’s high-integrity soil carbon credits are risk-free and accompanied by a host of co-benefits that address ecology, community, and economy.

 

Interested in buying premium removal credits? Let’s have a glass of wine at NY Climate Week.

 

James Cahalin
Director of Carbon Credits
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