How do carbon credits work?
Behind every credit is a chain that turns a real-world climate action into a verifiable, single-use unit. Here’s the full lifecycle — from a project’s baseline through independent verification, registry issuance, and the all-important retirement step — and the concepts that keep it honest.
In two sentences.
A verified project avoids or removes CO₂; an independent auditor checks it; a registry issues one serialized credit per tonne; you buy it; and you retire it on the registry to claim the benefit. Retirement removes the credit from circulation forever, so a tonne can only ever be counted once.
From a tree to a retired credit.
Seven steps take a climate action all the way to a permanent, public claim.
A developer designs a climate project (e.g. protecting a forest or capturing landfill gas) and establishes a baseline: the emissions that would have happened without it. The credit measures the difference from that baseline.
The project must show it is additional — that it needed the carbon finance to happen and isn’t business-as-usual — and follow an approved methodology under a standard like Verra’s VCS or Gold Standard.
An accredited third-party auditor measures, reports and verifies (MRV) the actual emissions avoided or removed. Nothing is issued until this is signed off.
The registry mints one credit per verified tonne, each with a unique serial number, and records it under the project. This makes every credit traceable and prevents the same tonne being counted twice.
Credits move from developers to buyers — directly, via exchanges and marketplaces, or through a reseller. Ownership transfers are logged on the registry.
To claim the climate benefit, the credit is permanently retired on the registry in the buyer’s name. Once retired it’s removed from circulation forever and can never be resold.
The retirement leaves an immutable public record — serial number, project, vintage and beneficiary — which is what a certificate and verification page point to as proof.
The ideas that make it work.
Six terms you’ll meet everywhere in carbon markets — and what they actually mean.
The counterfactual — what emissions would have been without the project. Credits measure the gap from it.
Proof the reduction wouldn’t have happened anyway. The most important and most scrutinised test.
Measurement, Reporting & Verification — the independent audit that turns a claim into a credit.
How long carbon stays stored. Nature projects set aside a shared “buffer pool” of credits to cover reversals like fire.
Emissions a project accidentally pushes elsewhere; good methodologies discount for it.
The final, one-way cancellation that converts a credit into a claimable offset.
Where your payment goes.
Buying a credit moves money from you to the people doing the work — the project developer and the host community — funding the forest, the clean stove, or the restoration, plus the jobs around them. A reseller takes a margin for sourcing, screening, retiring and certifying.
How double counting is prevented.
Every credit carries a unique serial number on a public registry, and each transfer and retirement is logged. Because retirement is a one-way cancellation that removes the credit from circulation, the same tonne cannot be resold or claimed twice. That public, immutable record is exactly what a verification page links to — so anyone can confirm a retirement without trusting the seller. See how we vet every credit →
Common questions.
How do carbon credits work?
A verified project avoids or removes CO₂ against a baseline; an independent auditor measures and verifies the reduction; a registry issues one serialized credit per tonne; the credit is bought; and the buyer permanently retires it on the registry to claim the climate benefit. Retirement removes it from circulation so the tonne can only be counted once.
How is a carbon credit created?
A developer follows an approved methodology under a standard (such as Verra or Gold Standard), proves the project is additional, and sets an emissions baseline. After an accredited third party measures, reports and verifies the actual reductions (MRV), the registry issues one credit per verified tonne with a unique serial number.
What does it mean to retire a carbon credit?
Retiring a credit means permanently cancelling it on the registry in a specific name so it can never be sold, transferred or claimed again. Retirement is the step that turns a credit you own into a carbon offset you can claim against your emissions.
How do carbon credits prevent double counting?
Every credit has a unique serial number on a public registry, and ownership and retirement are logged. Once a credit is retired it’s removed from circulation, so the same tonne cannot be resold or claimed by anyone else.
What is additionality and why does it matter?
Additionality means the emission reduction would not have happened without the revenue from selling credits. It matters because a credit only represents real climate benefit if the project genuinely depended on carbon finance — otherwise you’re paying for something that would have happened anyway.
Where does the money from carbon credits go?
Payment flows from the buyer to the project developer and, through them, to the activity and the host community — funding forest protection, clean-energy access, restoration and the jobs around them. A reseller takes a margin for sourcing, screening, retiring and certifying on your behalf.
See it end to end.
Buy a credit and watch the lifecycle finish — retired on a public registry in your name, with a certificate you can verify.