How the system works

In practice, compensation works via so-called "carbon allowances". One carbon allowance usually equals one ton of CO2. Anyone who owns or acquires such an allowance is entitled to emit one ton of greenhouse gases. This is also referred to as "emission permits" or “carbon credits”. There are two basic types of offsetting or trading with emission allowances from climate protection projects:

1.  Emissions Trading at State level under the Kyoto Protocol

Three "flexible mechanisms", namely emissions trading, the Clean Development Mechanism (CDM) and Joint Implementation (JI), are available to the signatory states in order to achieve their reduction targets and enable trading in emission rights. Emissions trading is a "regulated market". In the European Union, it is managed and controlled by the EU and its member states, whereas the CDM is controlled by the CDM Executive Board, an authority of the United Nations. Climate protection projects intending to sell carbon allowances need to be approved by this authority. Carbon credits generated in such projects are listed in the CDM registry.

The European Union has introduced a European Trading System for energy and other industries. Companies participating in European emissions trading receive a "pollutant budget" in accordance with their country's national allocation plan. The permitted emission quantity is set at an upper limit, which is gradually reduced. Each company may only emit as much climate-damaging carbon dioxide as it owns carbon credits.

If a company's emissions exceed the emission rights allocated to it, the company has three options:

  • Take measures to reduce CO2 emissions
  • Purchase certificates from other companies involved in emissions trading at home and abroad that do not need them
  • Acquisition of certificates from climate protection projects abroad that are generated via the Clean Development Mechanism instrument


2. Voluntary Emissions Trading

The emission reductions sold here cannot be sold or purchased under the official emissions trading scheme unless they also have CDM certification. The projects differ in scope and quality. The carbon credits of projects that are not certified according to the CDM standard but according to other standards such as the Gold Standard for the Global Goals are known as Verified Emission Reductions -VERs. On the voluntary market, projects sell their certificates to individuals, municipalities and regional churches, organizations and institutions that are not obliged to offset their emissions but do so voluntarily. They can use both the CERs and the VERs for this purpose.

Criteria for sustainable offsetting

A number of criteria should be taken into account for the assessment of compensation providers and compensation offers to ensure that generated emissions are offset completely and that the compensation projects contribute to sustainable development. If carbon offsetting has harmful social or ecological effects, the contribution to climate protection quickly becomes a cause of new environmental and development problems.

The projects of the Klima-Kollekte follow a high ethical standard: They contribute to poverty alleviation, support minorities, respect gender equality and promote local education and health.


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Direct compensation

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