Carbon Credit
A transferable instrument representing one tonne of CO₂ equivalent reduced or removed.
What is a Carbon Credit?
A carbon credit is a measurable, verifiable, and transferable instrument representing the reduction or removal of one metric tonne of carbon dioxide equivalent (tCO₂e) from the atmosphere. These credits are generated by projects that reduce greenhouse gas emissions or enhance carbon sequestration.
Why is a Carbon Credit important?
Carbon credits are important because they provide a market-based mechanism to incentivize emissions reductions and carbon removal projects that might not otherwise be financially viable. They allow companies and individuals to offset their unavoidable emissions, contributing to climate goals and channeling finance towards climate solutions.
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Frequently asked questions
The primary purpose is to allow entities to compensate for their own emissions by supporting projects that reduce or remove emissions elsewhere, thereby contributing to overall climate mitigation.
Legitimate carbon credits are issued by reputable registries under stringent standards (e.g., Verra, Gold Standard) that ensure additionality, permanence, MRV, and other quality criteria.
Yes, carbon credits are designed to be traded on both voluntary and compliance carbon markets, allowing for efficient allocation of capital to climate projects.