Carbon Credits

11 Sep 2023

A brief introduction to carbon credits.

What is a carbon credit

A carbon credit is a tradable certificate.

“A quality carbon credit means that one tonne of carbon dioxide has been reduced, or removed from the atmosphere” Emily Sharples @ South Pole explaining carbon credits

Projects are run which generate credits. If you, as an organisation or an individual, are responsible for creating green house gas (GHG) emissions (carbon dioxide or an equivalent), then you can buy credits and reduce your reported emissions, for instance to claim you are carbon neutral.

Example: Pump 10 tonnes of CO2 into the atmosphere + buy 10 credits = neutral. Credits are then spent, you can’t reuse them.

What is a carbon project

A carbon project is a project which produces credits by avoiding or removing emissions. Projects are typically nature based (e.g. planting trees, preserving wetlands) or technology based (e.g., direct air capture and storage technology).


Quality refers to how certain you can be that the carbon project actually removed (or is going to remove) what it claimed.

Who issues a credit

They are regulated by an internationally recognised carbon standard body. The United Nations has a big hand in it - United Nations Carbon Offset Platform. In the UK there is the UK Emissions Trading Scheme

Who buys them

They are traded on carbon markets, typically bought by organisations.

Net Zero

Net Zero means cutting green house gas emissions to as close to zero as possible, so that the environment can naturally re-absorb the remainder. UN Net Zero definition

Carbon Neutral

You can achieve Carbon Neutral by offsetting your GHG emissions with credits.

Not the same as Net Zero. You cannot claim to be Net Zero by using offsets (buying carbon credits), you need to reduce your emissions.

Positives and Criticisms

Offsets can play an important place in a climate strategy. Additionally carbon products / projects can (should) address concerns other than GHG removal and avoidance (e.g., positive impact on communities, addressing poverty).

Organisations have been criticised for using them as a lazy way of buying their way out of making their own reductions.

Market systems have unintended consequences and are difficult to get right / drive the intended behaviour (create a planetary system that sustains life regeneratively).

At worst they can be seen as a diversion from addressing the real underlying problems - this criticism has especially been targeted at technological solutions.

Measuring and determining the impact of projects can be complicated and time consuming. There is a need for more efficient and effective ways of measuring quality if they are to have the desired effect for Net Zero in time.

Photo by Casey Horner on Unsplash