Carbon credits 101

January 12, 2022
Climate Huddle

Carbon credits are often misunderstood. There’s a common misconception that they represent a ‘get out of jail free’ card for big companies who don’t want to change their behaviour. The voluntary carbon market is complex, so it’s no surprise there are misunderstandings, but it is crucial to get past the myths and misinformation. 

This post is here to help you get the facts straight. It explains what carbon credits are, how they work, and why they’re a crucial piece of the climate action puzzle. 

What are carbon credits and how do they work?

Around the world, climate action projects reduce or avoid (i.e. prevent the release of) greenhouse gas emissions. These certified projects generate “carbon credits” based on the amount of emissions they have removed or avoided: each credit is a certificate with a unique serial number vouching that 1 metric tonne of carbon dioxide equivalent (1 tCO2e) has been avoided or taken out of the atmosphere. Companies can then buy these carbon credits to compensate for – or offset – the equivalent number of emissions to those in their footprint. 

Every carbon credit is stored on a public registry; as soon as it is sold, it is removed (or ‘retired’) to make sure that it can only be used once, so there’s no risk of ‘double counting’. 

Not all carbon credits are considered high-quality...

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