Carbon credits are a key mechanism in the global fight against climate change, providing financial incentives for reducing greenhouse gas (GHG) emissions. In the context of recycling, carbon credits work by recognizing the emissions reductions that occur when recyclable materials are diverted from landfills, processed, and reintroduced into the production cycle. The recycling process typically requires less energy compared to manufacturing products from virgin materials, thus reducing GHG emissions. 

When a company engages in recycling activities, it can potentially earn carbon credits for the emissions reductions it achieves. These credits can then be sold on carbon markets to organisations or countries looking to offset their own emissions. Each carbon credit represents one metric tonne of carbon dioxide (CO2) or its equivalent in other GHGs that have been avoided or removed from the atmosphere. 

The role of recycling in reducing carbon emissions 

Recycling plays a crucial role in carbon reduction for several reasons: 

Energy savings: Recycling materials like metals, plastics, and paper generally consumes far less energy than producing these materials from raw, virgin resources. Since energy production is a major source of GHG emissions, using recycled materials can significantly reduce the carbon footprint. 

Reduced landfill emissions: When waste materials, particularly organic and plastic waste, are sent to landfills, they decompose and release methane—a potent greenhouse gas. Diverting materials from landfills to recycling reduces the volume of methane emissions, thus contributing to carbon reduction efforts. 

Circular economy: Recycling supports the circular economy by keeping materials in use for as long as possible, reducing the need for new resource extraction. The fewer raw materials that are mined or extracted, the lower the associated GHG emissions. 

Current prospects for carbon credits in recycling 

The prospects for earning carbon credits from recycling activities are growing, driven by increasing global awareness of the need to reduce emissions and the expanding carbon credit markets. Some of the key trends and developments include: 

Market growth: The voluntary carbon market is expected to grow significantly, driven by corporate net-zero commitments and governmental policies. Companies looking to offset their emissions are turning to carbon credits as a way to meet their climate goals, which provides an opportunity for recycling companies to monetize their emissions reductions. 

Corporate demand: Corporations are increasingly looking for ways to offset their carbon footprints, with many setting aggressive sustainability targets. Recycling companies that can quantify and certify their emissions reductions can sell carbon credits to these organizations, creating a new revenue stream. 

Government incentives: Many governments are introducing policies and regulations that promote recycling as a way to achieve national carbon reduction targets. These policies may include financial incentives or subsidies for recycling companies that help reduce GHG emissions. 

Technological advances: Advances in technology, such as blockchain, are helping to improve transparency and traceability in the recycling industry, making it easier to verify emissions reductions and generate carbon credits. 

Regulatory requirements for carbon credits from recycling 

To generate carbon credits from recycling activities, companies must meet specific regulatory requirements that ensure the integrity and transparency of the emissions reductions. Some of the key requirements include: 

Companies must have their emissions reductions verified by third-party auditors. This ensures that the claimed carbon reductions are real, measurable, and additional (i.e., they would not have occurred without the recycling activity). Verified carbon credits can then be issued by accredited bodies such as Verra or Gold Standard. 

Recycling companies must register their projects with carbon credit registries that oversee the issuance of carbon credits. These registries ensure that projects comply with international standards and provide a marketplace for trading credits. 

Carbon credits must comply with standards such as the Clean Development Mechanism (CDM) under the Kyoto Protocol or voluntary standards like Verra's Verified Carbon Standard (VCS). These standards define the methodologies for calculating emissions reductions from recycling activities. 

Recycling companies need to use specific methodologies to calculate the emissions reductions from their activities. For example, methodologies may involve calculating the amount of emissions avoided by recycling materials instead of producing them from virgin resources, as well as any energy savings realized. 

Future impacts of carbon credits in recycling 

The future of carbon credits in recycling is promising, as the world intensifies efforts to combat climate change. Some of the potential impacts include: 

As more companies recognise the financial value of carbon credits, there may be increased investment in recycling infrastructure and technologies, particularly in developing countries where waste management systems are less developed. 

Carbon credits will help drive the adoption of circular economy principles, as businesses seek to reduce emissions by reusing and recycling materials rather than relying on new resource extraction. 

The ability to generate and sell carbon credits could provide a significant new revenue stream for recycling companies, helping them to grow and scale their operations. 

As governments around the world implement stricter carbon regulations, recycling will likely become a key strategy for meeting emissions reduction targets. This could lead to further integration of carbon credits into national and international climate policies. 

RecyclX by asm, as a traceability platform, plays a critical role in helping recycling companies generate carbon credits by ensuring transparency, accurate data collection, and verifiable emissions reductions. RecyclX tracks the entire lifecycle of recycled materials, from collection to reprocessing, ensuring that all activities are accurately documented. This traceability is essential for verifying emissions reductions and generating carbon credits. 

It collects real-time data on recycling activities, uses a blockchain-based ledger to ensure that all transactions and data are secure, transparent, and immutable. It provides digital product passports that prove the sustainability of the materials and provide evidence needed for carbon credit verification. 

Surbhi Jore, the Founder and CEO of ASM Global, spearheaded the development of RecyclX, a ground-breaking platform that  provides traceability and transparency in circular supply chain.