Carbon credits are the currency of carbon offset markets. A carbon credit unit is supposed to represent a tonne of carbon dioxide or other greenhouse gases reduced or removed. Carbon credits are generated through projects, typically registered with a carbon credit certifier. The dual idea behind carbon credits is that projects that reduce or remove emissions from the atmosphere need funding they would not receive other than through the carbon credit revenue, while polluters can pay for these emission reductions as a theoretically cost-effective form of climate action if their own reduction of a tonne of CO2 is more costly than one carbon credit. 

However, in reality offsetting is too often a losing proposition for the atmosphere because carbon credits rarely perform the climate balancing function described on the tin. The climate impact of units is so exaggerated that many carbon credits do not represent anywhere near a tonne of emissions.

Many different types of projects generate carbon credits, such as the best known forestry and land use. Other types include projects focusing on the social dimension of climate action, such as the distribution of cookstoves, or on chemical processes, such as the destruction of ozone depleting gases. 

In and of itself, a carbon credit is merely a certificate. However, carbon credits are typically used to enable the practice of ‘offsetting’: a company, country or organisation purchases these units to compensate for some of its emissions. This is, at its very best, a zero sum game because offsetting does not reduce absolute emission levels and helps polluters sidestep their climate responsibility and greenwash their images. Rather than engaging in offsetting, buyers of carbon credits should employ what is known as the ‘contribution claim’ model in which they communicate transparently about their climate investment without making far-fetched claims that this somehow compensates for their polluting activities.

Carbon Market Watch scrutinises the quality of credits, the integrity of the marketplaces trading these units, and investigates falsely positive climate claims. CMW is against offsetting and supports fairer, more transparent uses of carbon credits and the prioritisation of rapid and significant emissions reductions undertaken by polluters.