Understanding carbon credits and how carbon markets work is essential for participating in global climate action. Learn the fundamentals here.
Carbon credits are tradable certificates representing the right to emit one tonne of carbon dioxide or equivalent greenhouse gases. They are created through projects that reduce, remove, or avoid greenhouse gas emissions.
Carbon markets operate on a cap-and-trade system where companies can buy credits to offset their emissions. These markets help create financial incentives for reducing greenhouse gas emissions.
Carbon markets are divided into compliance markets (regulated by governments) and voluntary markets (where companies voluntarily offset their emissions).
Carbon credit prices are influenced by factors including project type, verification standard, vintage year, and market demand. Prices can vary significantly across different markets and project types.
Projects are developed to reduce, remove, or avoid greenhouse gas emissions
Independent bodies verify the emission reductions and issue carbon credits
Credits are traded on markets and used to offset emissions