What is a carbon credit, and who buys it?

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A carbon credit is a certificate for one tonne of carbon dioxide equivalent (CO2e) that a project kept out of the air or took out of it. A carbon-crediting programme issues it after an independent check and records it in a registry. Companies, groups and individuals buy it, often to balance emissions they cannot cut yet. Think of a credit as a numbered receipt for one tonne of climate benefit. Verra, a large credit programme, says one of its credits represents one metric tonne of carbon dioxide (CO2) reduced or removed from the atmosphere. A tonne of CO2e means other gases are counted too, each turned into CO2 units by its warming power. Verra says credits can come from cutting any greenhouse gas, with CO2 as the reference point. A credit exists only after checks. Before that, the reduction or removal is just a claim. Each issued credit gets a serial number in a registry, so each tonne can be tracked and is much harder to sell twice. When a buyer uses a credit to balance emissions, it is retired: taken out of circulation and no longer for sale. Verra says at that point it becomes an offset. On Verra, a project developer runs a project that cuts or removes emissions. Other programmes use other terms. The developer picks a methodology, which is the rulebook for counting, and writes a project design document. An independent validation and verification body (VVB) checks the design against the rules. The project runs and records its results in monitoring reports. The VVB checks again that the reductions or removals were counted as the rules require. The programme issues credits, each with a serial number in a registry. Buyers, or brokers and retailers acting for them, buy the credits. A buyer who uses one retires it. Voluntary buyers: companies, non-profit groups and individuals who want to reduce their carbon footprint. Nobody forces them. Verra says the voluntary market is not regulated by government. Compliance buyers: where a law sets a limit, a business that goes over may be allowed to cover part of the gap with offsets. Verra gives cap-and-trade systems as an example, and says the Colombian and South African governments let companies with carbon tax bills surrender offsets from the Verified Carbon Standard, the Gold Standard or the Clean Development Mechanism. Brokers and retailers buy and resell. They are middlemen, not the final user. Verra says offsets should be used to counterbalance emissions that cannot be directly reduced, removed or avoided. My reading: cut what you can first, then use credits for what is left. The split below is my plain-words reading; Verra's wording is 'reduced or removed'. An avoidance credit pays for emissions that did not happen. Verra's examples include fuel-efficient cookstoves and capturing and destroying landfill gas. It is like fixing a leaking tap before the bath overflows. A removal credit pays for CO2 pulled out of the air and stored. Verra lists planting trees, and its programme page names geologic carbon sequestration. It is like bailing water out of the bath. The difference matters for how long it lasts. The Integrity Council for the Voluntary Carbon Market (ICVCM) says reductions or removals shall be permanent or, where there is a risk of reversal, measures shall be in place to address those risks and compensate reversals. A forest can burn. Carbon locked underground is much harder to lose. That second line is my plain reading. Both say one tonne, like two bags marked one kilogram where only one was weighed on a checked scale. The ICVCM sets ten Core Carbon Principles for high-integrity credits. Some of them: Additionality: the reduction would not have happened without the money from credit sales. Permanence: it lasts, or the risk of reversal is covered. Robust quantification: counted on conservative approaches and scientific methods. No double counting: no double issuance, double claiming or double use. Independent validation and verification at programme level. Tracking in a registry so each credit can be identified securely and unambiguously.

What is a carbon credit, and who buys it?

What one credit stands for

How a credit is made on Verra

Who buys, and why

Avoidance and removal

Why two one-tonne credits are not equal

Example: a buyer with 2,500 tonnes a year

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