A carbon credit is a claim that one tonne of CO2 equivalent (tCO2e) was avoided or removed. Everything that makes that claim believable happens before you buy it, in a chain of design, audits and registry entries that most buyers never look at.
A carbon credit is created when an independently audited project proves it avoided or removed one tonne of CO2e, and it is used up when a buyer retires it in a public registry. In between there are six steps. Each one leaves a document you can ask for, and each one is a place where weak credits give themselves away.
This article follows a single credit through those steps. If you first want the basics of what a credit is and which project types exist, start with what are carbon credits.
The six steps at a glance
Step | Who | Output you can check | Red flag |
|---|---|---|---|
1. Design | Project developer | Project design document (PDD), chosen methodology | methodology not CCP-approved or no longer open to new projects |
2. Validation and registration | VVB, standard | Validation report, registry listing | long “under validation” status, no public documents |
3. Monitoring | Developer | Monitoring report per period | gaps between periods, unclear data sources |
4. Verification and issuance | VVB, standard | Verification report, issued serial numbers, vintage | issuance far above earlier periods without explanation |
5. Sale and transfer | Developer, intermediary, buyer | Contract, transfer between registry accounts | credits that cannot be traced to a project page |
6. Retirement | Buyer (or provider on its behalf) | Retirement statement with serial numbers and beneficiary | retirement in a pooled account, no beneficiary named |
Step 1: project design and methodology
Every credit starts with a methodology: the rulebook, approved by the standard, that says how a type of project calculates its impact. A cookstove project, a forest conservation project and a biochar plant each use a different one.
The developer writes a project design document that applies the methodology to the site. It sets the baseline (what would happen without the project), shows why the project is additional (it would not happen without carbon finance), and defines how emissions will be monitored and how leakage and reversal risk are handled.
Most of the quality of a credit is decided here, years before it is issued. A generous baseline produces more credits per real tonne. A weak additionality test lets in projects that would have happened anyway. That is why the ICVCM assesses methodologies rather than individual projects: as of August 2026, 45 methodologies are CCP-Approved across 13 eligible programmes. Our guide to additionality goes through the tests per project type.
Standards update their rules over time. Verra’s VCS Program Version 5, launched in December 2025, requires most projects to reassess their baseline and move to updated methodologies every five years, and applies to all new projects from 1 January 2027 (Verra).
Step 2: validation and registration
Before a project can issue anything, an accredited validation and verification body (VVB) audits the design: is the methodology applied correctly, is the baseline defensible, are the safeguards for local communities in place? The VVB is paid by the developer but accredited by the standard, and its report is public.
After a positive validation, the standard registers the project. From that moment it has a public page in the registry with an ID, the documents and, later, every issuance and retirement. For Verra that is the Verra Registry, for Gold Standard the Impact Registry, and removal standards such as Puro.earth and Isometric run their own.
A buyer’s first check is simple: open the registry page. If a supplier cannot give you a project ID, you cannot check anything that follows.
Step 3: monitoring
Once running, the project collects data for each monitoring period: fuel use per stove, satellite imagery of forest cover, tonnes of biomass converted to biochar, tonnes of CO2 injected underground. The developer reports the results in a monitoring report.
This is where measurement methods differ most. Metered or measured data (a sensor on a stove, a weighbridge at a biochar plant) is stronger than survey-based estimates. Some standards now accept digital monitoring systems that send data continuously, which can shorten the time between impact and issuance.
Step 4: verification and issuance
For each monitoring period, a VVB verifies the results: checks the data, visits the site or samples it, and confirms the tonnes. Only then does the standard issue credits.
Three details at this step matter to a buyer:
Serial numbers. Every credit gets a unique serial number, so the same tonne cannot be sold twice.
Vintage. The vintage is the year in which the reduction or removal happened, not the year of issuance or sale. Recent vintages are worth more, for reasons explained in what a carbon credit vintage tells you.
Buffer deduction. For projects where carbon can be released again, such as forests and soils, a share of the credits goes into a buffer pool that covers future reversals across all projects of the standard. The share depends on the project’s risk rating. Credits in the buffer are never sold.
Ex-post vs ex-ante. Most credits are issued ex-post: after the tonne has been verified. Some standards also issue ex-ante or forward units for impact that is expected but not yet delivered, such as Gold Standard’s Planned Emission Reductions. They help finance a project’s start and convert to verified credits once the removal is audited. Until then, what you hold is a forecast. SBTi V2.0 only counts verified, ex-post removals towards its removal requirement (SBTi carbon removal requirements).
Step 5: sale and transfer
Credits now sit in the developer’s registry account. From there they are sold, directly to a buyer or through brokers, traders and platforms, and moved between registry accounts. A credit can change hands several times before anyone uses it.
The price is set in that sale, usually in a bilateral contract rather than on an exchange. A buyer can also commit before issuance, through a forward contract or a multi-year offtake that pays for future vintages at an agreed price (spot vs forward vs offtake). The trade itself is covered in carbon credit trading explained.
What matters at this step is traceability. However many intermediaries are involved, you should be able to trace your credits to a project ID and a serial number range.
Tip from Bernard de Wit, Founder of Regreener: “Ask for the serial number range in the quote, not only in the invoice. A supplier who can name the exact credits before you pay has them in its account. One who can only name them afterwards is often still buying them.”
Step 6: retirement
A credit delivers its climate benefit only when it is retired. Retirement is a registry action that takes the credit out of circulation permanently, with a public record of:
the serial numbers and the project,
the vintage,
the beneficiary: the company on whose behalf the credit was retired,
often the purpose or the year of emissions it relates to.
That retirement statement is the evidence behind every claim you make, from a contribution claim on your website to the credits section of a CSRD report. Retiring in your company’s name matters: credits retired in a provider’s general account, without your name as beneficiary, are hard to defend if an auditor or journalist asks. In the Regreener platform, clients such as SparkOptimus can see the projects they support and the verified outcomes behind them.
For credits authorised under Article 6 of the Paris Agreement, there is one more layer: the host country applies a corresponding adjustment, so the tonne no longer counts towards its own climate target. Most voluntary credits are not authorised and do not need to be for a contribution claim. See Article 6 explained for when it matters.
Where carbon credits go wrong
When a credit fails, it rarely fails at the end of the chain. It usually fails in the design, and later steps carry the error forward:
Over-generous baselines in step 1 produce more credits than real tonnes. Independent studies of forest conservation and cookstove methodologies found exactly this.
Weak additionality in step 1 lets in projects that would have happened anyway.
Optimistic monitoring in step 3, such as survey-based stove usage, inflates verified results.
Double claims in steps 5 and 6, when the same tonne is claimed by the buyer and counted by the host country without authorisation, matter mainly for compliance use.
Validation and verification catch mistakes in applying a methodology. They do not fix a methodology that is too generous. That is why buyers add their own layer: independent ratings from agencies such as BeZero, Sylvera and Calyx, and a due diligence framework. Ours, the Regreener quality framework, checks every project against more than 100 data points across five domains before a client sees it.
“Most buyers check the end of the chain: is there a certificate, is there a retirement. The risk sits at the start, in the baseline and the additionality test. That is where we spend most of our due diligence time, because no audit later in the chain can repair it.”
Bernard de Wit, Founder of Regreener
What this means when you buy
For each credit you consider, ask for five things:
The registry page of the project (step 2).
The methodology and whether it is CCP-Approved (step 1).
The latest verification report (step 4).
The serial number range and vintage you will receive (step 4 and 5).
A retirement statement in your company’s name after purchase (step 6).
A supplier who supplies all five quickly is selling credits it knows. Our questions to ask a carbon credit supplier turns this into a full checklist, and the free credit quality checker scores a specific project.
Want to see the chain behind your credits?
Send us a project you are considering, or the credits you already hold, and we will show you what the registry, the methodology and the verification history say.
