Carbon credits explained

A practical guide to carbon credits

Understand what a carbon credit represents, how projects generate credits, what buyers should examine and how retirement records the use of a credit.

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The short answer

A credit is a unit with a documented history

One carbon credit generally represents one metric tonne of carbon dioxide equivalent reduced or removed. That unit should be traceable to a project, methodology, monitoring period, independent verification and registry record.

The headline quantity is only the beginning. Buyers should also understand the project activity, applicable standard, vintage, safeguards, issuance record and retirement route.

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Design

A project applies an approved methodology to a defined activity, baseline and monitoring plan.

Validate

An approved independent body evaluates whether the project design meets the programme requirements.

Monitor

The project records activity and outcome data for a defined monitoring period.

Verify

An independent audit examines the monitored reductions or removals before issuance is approved.

Issue and retire

Credits are issued with unique registry records. Retirement records that a credit has been used and prevents the same unit being transferred again.

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CO2balance can help with verified credit purchases, carbon project development, project investment and carbon management.

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