A carbon credit is how climate action gets counted and traded. A project cuts or removes greenhouse gases, an independent auditor checks the result, and a registry turns each verified tonne into a credit that someone can buy and retire. This page explains what one credit stands for, how it moves from project to retirement, and who keeps the records.

It sits in our Learn section, which covers the basics of carbon markets.

What does one carbon credit represent?

One carbon credit represents one tonne of carbon dioxide equivalent (tCO₂e) that a project has reduced or removed. Verra defines each of its Verified Carbon Units this waySource 1, and Gold Standard uses the same one-tonne unit for its creditsSource 3.

“CO₂ equivalent” means other greenhouse gases, such as methane, are converted into the amount of carbon dioxide that would warm the planet by the same amount. That lets a methane-capture project and a forest project be measured in the same unit.

A credit is a record, not a physical thing. What you are buying is the right to claim that one tonne of reduction or removal, backed by an entry in a public registry.

How is a carbon credit created, issued and retired?

Every credit follows the same four steps, and one serial number follows the tonne the whole way.

  1. 1

    CreatedVerified

    A project cuts or removes emissions; an auditor checks the numbers.

  2. 2

    IssuedActive

    A registry issues one credit per tonne, each with a serial.

  3. 3

    SoldTransferred

    A shop, marketplace or broker transfers it to you.

  4. 4

    RetiredRetired

    Cancelled in your name for good. Can’t be resold.

Fig. 1 — The life of a carbon credit. A credit counts toward a claim only at step 4.
  1. Created. A project cuts or removes emissions against a baseline. Under Verra’s programme, projects are audited both by Verra staff and by qualified third partiesSource 2.
  2. Issued. Once verification is complete and approved, the project can request the issuance of creditsSource 2. Each credit gets a unique serial number in the registry. Our page on how carbon credits are created covers these steps in detail.
  3. Sold. The project, a reseller or a broker sells the credit. Ownership moves between registry accounts; the serial number stays the same.
  4. Retired. The buyer, or a seller on the buyer’s behalf, retires the credit against a named person or organisation. Retired credits are taken out of circulationSource 2 and can’t be resoldSource 3.

Ask for the retirement record

If you buy credits, ask for the registry link that shows them retired in your name, with the serial numbers. A credit that has been sold to you but not retired doesn’t support any claim yet. Our guide to carbon credit retirement shows how to check.

Avoidance credits vs removal credits

Credits come in two broad kinds, and the difference matters when you choose what to buy.

  • Avoidance (or reduction) credits pay for emissions that would otherwise have happened. Protecting a forest that was going to be cleared, or replacing a fuel-hungry cookstove, are typical examples.
  • Removal credits pay for carbon dioxide taken out of the air and stored, for example by planting trees, adding biochar to soil or capturing CO₂ directly from the air.
Dense tropical forest canopy with low cloud over the hills behind
Illustrative photo · Forest protection (REDD+) · avoidance
A steel tray of biochar with a scoop, in front of a rotary kiln in an industrial hall
Illustrative photo · Biochar · removal

Both are measured in the same unit, one tonne of CO₂e per credit. They differ in how the tonne is achieved and in how long the carbon stays out of the atmosphere; our guide to removal vs avoidance credits compares them in detail.

Who issues carbon credits?

Credits are issued by standards bodies, each running its own public registry. Verra’s registry tracks the generation and retirement of every VCUSource 2, and Gold Standard retires credits in its Impact RegistrySource 3. Our pages on carbon standards and carbon registries compare the main ones. Governments also issue credits and allowances in compliance markets, which our page on voluntary vs compliance markets explains.

Because standards differ in their rules, an independent body now sets a common quality bar. The Integrity Council for the Voluntary Carbon Market (ICVCM) has published 10 Core Carbon Principles, covering areas such as additionality, permanence and avoiding double counting. Credits that meet them can carry the CCP labelSource 4.

Credit vs offset

People use the two words interchangeably. Strictly, the credit is the certificate; offsetting is what you do when you retire it against your own emissions. Our advice: cut your own emissions first and offset only what is left. See credit vs offset for how the guidance uses each term.

Where to go next

Carbon credits are traded in two different kinds of market with different buyers and rules. Read what the carbon market is for the big picture, or go back to the guide to buying carbon credits when you are ready to buy.