The Project Developer: The Creator of Credits

The project developer is the foundational actor in the carbon market. This entity is responsible for identifying, designing, and implementing projects that actively reduce or remove greenhouse gas (GHG) emissions.³ Their role is to transform a climate action idea into a verifiable, credit-generating asset.

• Project Conception: They conduct feasibility studies to identify a project’s potential for emissions reduction and prove its “additionality” (i.e., that the project wouldn’t have happened without the financial incentive from carbon credits).⁴

• Methodology and Documentation: Developers select an approved carbon standard and its specific methodology, then create a detailed Project Design Document (PDD) that serves as the project’s blueprint for verification.⁵

• Monitoring and Verification: They are responsible for continuously monitoring the project’s performance and preparing reports.⁶ These reports are then submitted to a third-party auditor for verification, a critical step that validates the emissions reductions.⁷

• Credit Generation: Once verified, the project developer works with a registry to have the carbon credits issued into their account.⁸

Brokers and Other Intermediaries: The Market Facilitators

After credits are generated, brokers and other intermediaries play a crucial role in connecting project developers with buyers.⁹ They act as the “middlemen” in the market, providing liquidity and expertise.¹⁰

• Brokers: A carbon broker acts as an agent, connecting a buyer with a seller to negotiate a deal.¹¹ They work on behalf of their clients to find specific types of credits that meet a buyer’s needs (e.g., project type, location, certification standard). They provide personalized service and expertise, helping clients navigate the complexities of the market, but often charge a commission.

• Traders and Financial Institutions: These entities buy and sell large volumes of credits on the market, either for their own portfolios or on behalf of clients.¹² They provide liquidity, helping to stabilize prices and ensuring that there is always a market for credits.¹³

• Carbon Marketplaces and Exchanges: These are digital platforms that offer a more transparent and direct way for buyers and sellers to transact.¹⁴ Unlike brokers who negotiate on behalf of clients, exchanges provide a structured environment for market participants to buy and sell credits based on real-time pricing and standardized contracts.¹⁵ They reduce transaction costs and increase market accessibility.