Carbon credits explained
A short guide
A carbon credit is a certificate that one tonne of carbon dioxide, or its equivalent in other greenhouse gases, was kept out of the atmosphere or taken out of it. Here is how they work.
Key facts
| 1 credit | One tonne of CO2e |
|---|---|
| Issued by | Standards such as Verra and Gold Standard |
| Held in | Public registries, with serial numbers |
| Used by | Companies, airlines and governments |
In plain words
The basics.
A carbon credit is a certificate that says one tonne of carbon dioxide, or its equivalent in other greenhouse gases, was kept out of the atmosphere or taken out of it.
Credits are created by projects, checked by independent auditors, issued by a standard such as Verra or Gold Standard, and tracked in a public registry with a unique serial number. When a buyer uses a credit to make a claim, it is retired and can never be used again.
Before buying, check five things: the standard, the vintage (the year the reduction happened), the project type, the registry record, and who retires the credit and in whose name.
Who it is for
- Anyone new to carbon markets
- Teams preparing a first purchase
- Board members and investors who want the basics
What you get
- The key terms in plain words
- The life of a credit, step by step
- A checklist for buying
Kinds of credit and market
Emissions that would have happened, prevented: clean cookstoves, renewable power.
CO2 pulled from the air: reforestation, biochar, soil carbon.
Companies offset emissions they choose to address.
Schemes like CORSIA require airlines to offset.
Glossary
Five terms worth knowing.
- tCO2e
- Tonne of carbon dioxide equivalent, the unit every credit is counted in.
- Vintage
- The year the emission reduction or removal took place.
- Registry
- The database that issues, tracks and retires credits.
- Retirement
- Cancelling a credit so the claim cannot be made twice.
- CORSIA
- The ICAO scheme that requires airlines to offset growth in international emissions.
How it works
Step by step.
- 01
Project
Avoids or removes CO2.
- 02
Verify
Auditor confirms the tonnes.
- 03
Issue
One credit per tonne.
- 04
Hold
Tracked by serial number.
- 05
Retire
Claimed once, then cancelled.
Is buying credits the same as reducing emissions?
No. Credits are a way to address emissions you cannot yet cut. Most climate frameworks expect companies to reduce their own emissions first.
What is CORSIA?
A scheme run by the International Civil Aviation Organization that requires airlines to offset growth in international flight emissions with eligible units.