What is A Carbon Credit?

What is a Credit?

A carbon credit is a certificate that proves the reduction or removal of harmful emissions. One credit is issued for every tonne of greenhouse gases (often called CO2 or CO2 equivalents) pulled from the atmosphere.

How Are Credits Made?

1. Projects ranging from individual efforts to large-scale operations generate (see How are Credits Generated) carbon credits. This can be done in a variety of ways, from forest management to direct carbon capture technology (see Methodologies).

2. Buyers who wish (or are required, see voluntary vs. compliance) to counter the effect of their emissions purchase credits on the open market.

3. Finally, the credits are retired and permanently removed from the open market. Retirement ensures that nobody gets credit for emissions somebody else already has reduced.

Who is Involved in the Carbon Credit Process?

From birth to retirement, carbon credits pass through the hands of many entities. There are the projects that generate their impact (see How Are Credits Generated), the registries that verify their impact (see How Are Credits Verified), the buyers who claim the environmental impact, and the market-makers like Carbonlink who distribute the credits.

Credits vs. Offsets

The terms “carbon credit” and “carbon offset” are similar, but have a few technical differences. Both credits and offsets represent avoidance or removal of CO2e (see CO2 equivalents) from the atmosphere. However, the term “carbon offset” denotes a credit that has been retired and thus removed from the carbon economy, which “offsets” the environmental impact. Credits, on the other hand, can be at any stage in the life cycle.