Carbon credits

Tradable certificates representing the reduction or removal of one metric tonne of carbon dioxide (CO₂) or its equivalent in greenhouse gases (CO₂e) from the atmosphere. They are used in carbon markets to incentivise emission reductions and offset unavoidable emissions. 

There are two types of carbon credits: 

• Compliance credits – Issued as part of regulated carbon trading systems (e.g. the EU Emissions Trading System), where companies are required to hold credits to legally emit greenhouse gases and comply with emissions reduction targets. 

• Voluntary credits – Bought and sold in voluntary carbon markets, where organisations and individuals invest in climate projects (e.g. reforestation and renewable energy) to offset their emissions voluntarily.