As the urgency to address climate change intensifies, carbon credits have emerged as a practical - though sometimes controversial - solution. Yet for many people, they remain confusing or misunderstood. What exactly are carbon credits? How do they work, and who uses them?
1. What are carbon credits?
A carbon credit is a tradable unit of one metric ton of carbon dioxide (CO₂) or an equivalent amount of another greenhouse gas. The concept was developed under the Kyoto Protocol and later integrated into the Paris Agreement frameworks for reducing emissions globally.
While the term “carbon offset” is often used interchangeably, it technically refers to the project that reduces or removes emissions, whereas the carbon credit is the unit issued from that project. Learn more about what carbon credits are, and how to use them here.
2. How do carbon credits work?
Carbon credits operate within compliance and voluntary carbon markets.
In compliance markets like the EU Emissions Trading System (EU ETS), governments cap emissions and issue allowances that can be traded among regulated entities. These are legally binding.
In contrast, voluntary markets allow individuals and companies to buy credits to compensate for their emissions. These are not required by law but driven by ESG commitments and consumer demand. Voluntary markets are supported by verification bodies such as Verra, Gold Standard, and Climate Action Reserve.
For a deep dive into how these systems function, see this article or this explanation of McKinsey & Co.
3. What kind of carbon credit projects are there?
Carbon credits are generated through a range of projects, typically categorized into avoidance, reduction, or removal projects.
Nature-based solutions include reforestation, forest protection (e.g. REDD+), and regenerative agriculture.
Renewable energy projects support wind, solar, and hydroelectric installations in developing countries.
Clean technology initiatives range from improved cookstoves to methane capture systems and direct air capture (DAC).
For examples, explore our Project Overview or Verra’s Verified Carbon Standard (VCS) project registry.
4. Who can buy carbon credits?
Carbon credits are available to anyone: individuals, startups, corporations, and governments.
Consumers may use them to offset travel, lifestyle, or even full-year emissions. Businesses typically purchase them to offset residual emissions, particularly Scope 3 emissions that are difficult to eliminate internally.
5. Who are the biggest buyers of carbon credits?
Leading corporate buyers include:
Microsoft – committed to becoming carbon negative by 2030
Amazon – a founding member of The Climate Pledge
Stripe Climate and Shopify – investing in frontier carbon removal
Major airlines like Lufthansa and Delta offering carbon-neutral flights
Oil majors like Shell and BP, participating in voluntary and compliance markets as part of their decarbonization plans
Industry data is regularly compiled by Ecosystem Marketplace and Carbon Market Watch.
6. How can I buy carbon credits?
You can purchase credits directly through certified platforms. For practical options on business offsets, platforms like Regreener, Gold Standard Marketplace, and MyClimate offer verified, transparent solutions.
Be sure the credits are certified, traceable, and clearly explain their methodology. Reputable projects will often include documentation, third-party audits, and impact reporting.
To learn more about how to buy carbon credits in 5 steps, read this article.
7. How are carbon credits verified?
Verification ensures that carbon credits represent real, measurable, and permanent emissions reductions. Leading standards include:
These standards involve rigorous Monitoring, Reporting and Verification (MRV) procedures. Independent third parties audit each project before credits are issued. Buyers can confirm a credit’s legitimacy by checking public registries or QR codes often provided post-purchase.
8. Are carbon credits effective in fighting climate change?
Carbon credits can be effective if used responsibly and sourced from high-integrity projects. According to Oxford University’s Principles for Net Zero Aligned Offsetting, offsets should prioritize permanent removals over avoidance and be transparently reported.
Critics rightly point to concerns around greenwashing, especially when credits are used as substitutes for real internal reductions. That’s why it’s essential to treat credits as a complementary tool, not a solution in isolation.
9. How do carbon credits fit into ESG and Net Zero strategies?
Many organizations integrate carbon credits into their Environmental, Social, and Governance (ESG) and Net Zero frameworks. They’re typically used to compensate for emissions that are currently unavoidable, especially those classified under Scope 3 (supply chain, logistics, customer use).
The Science Based Targets initiative (SBTi) encourages companies to focus first on emissions reductions and then use high-quality removals as supplementary actions. Similarly, Race to Zero outlines how offsets can fit into credible Net Zero journeys.
Carbon credits can also play a (complementary) role when working with an internal carbon price. To better understand what role carbon credits can play in your carbon strategy, read our Ultimate Guide about buying carbon credits.
10. Are carbon credits a good investment?
The carbon credit market is projected to reach $50 billion by 2030, according to McKinsey & Company. With rising demand and tightening supply, prices for high-quality credits are expected to increase - especially for removal-based offsets.
That said, the market is still maturing. Volatility, regulation, and credibility issues make it a risky financial instrument without clear standards. If investing, it’s crucial to focus on credits from projects with transparent methodologies and reputable registries.
11. What is the price of carbon credits?
On the voluntary carbon market, prices typically range from €8 to €25 per ton. High-quality carbon removal credits—especially those from innovative technologies—can cost even more.
For example, a simple forest protection project may issue credits for around €10–12 per ton, while direct air capture credits might exceed €200 per ton due to the cost and complexity of the technology.
To get a cost estimation of what offsetting would cost for your company, use our free tool.
12. Isn’t carbon offsetting just greenwashing?
This is one of the most common and important questions. The short answer is: it depends on how offsetting is used. The long answer can be found here.
Carbon offsetting becomes greenwashing when companies use it to avoid making meaningful emissions reductions in their own operations, or when they purchase low-quality, unverifiable credits simply for PR purposes. In these cases, offsetting gives the illusion of climate action without delivering real environmental impact.
However, when used transparently and responsibly, carbon offsetting can be a powerful tool. High-integrity companies prioritize internal decarbonization first, and use carbon credits only for the emissions that are hardest to eliminate—especially in hard-to-abate sectors like aviation, construction, or agriculture.
To avoid greenwashing:
Choose high-quality, independently verified credits (e.g. from Verra or Gold Standard)
Be clear and honest about what you’re offsetting
Integrate offsetting into a broader Net Zero or ESG strategy, not as a substitute for real action
Organizations like SBTi, Oxford Offsetting Principles, and VCMI provide guidance on how to offset credibly—without falling into greenwashing.
13. What are the best carbon offset projects?
High-quality CO2 offset projects meet strict quality criteria that guarantee their effectiveness and reliability. These criteria are essential for ensuring actual emission reductions.
The core Requirements for Quality Projects are:
Additionality: The project must demonstrably lead to emission reductions that would not occur without the project
Measurability: The CO2 reductions must be able to be accurately quantified
Permanentness: The emission reductions must be guaranteed for a long time
Unique registration: Credits may only be used and sold once
Social impact: Positive contribution to local communities
A list of the best projects of 2025 can be found here.
14. How is the carbon credit market regulated?
The carbon market is regulated at both national and international levels. Compliance markets are governed by bodies like the European Commission and California Air Resources Board.
The voluntary market, though currently self-regulated, is under growing scrutiny. The Integrity Council for the Voluntary Carbon Market (ICVCM) and Voluntary Carbon Markets Integrity Initiative (VCMI) are working to create universal standards.
Internationally, Article 6 of the Paris Agreement enables countries to trade emission reductions, laying the groundwork for a global carbon market. As this evolves, the entire ecosystem is likely to see increased harmonization and transparency.
15. Summary
Carbon credits are a powerful mechanism for channeling investment into climate solutions. When sourced responsibly and used alongside emissions reductions, they can fund impactful projects and support global decarbonization goals.
The key to their effectiveness lies in quality and transparency. For businesses and individuals alike, choosing the right credits - and using them ethically - ensures your climate actions are meaningful, not just symbolic.
How Regreener helps you offset carbon emissions
At Regreener, we help individuals and businesses take climate action with ease and confidence. Our platform offers:
Access to verified, high-impact carbon credit projects
Full transparency on methodology and impact
Personalized dashboards to track your contribution
Whether you’re offsetting a single flight or building a company-wide sustainability program, we provide a streamlined and trustworthy solution.
