The core of a carbon credit is its representation of a specific amount of MTCO2e emissions that have been reduced, avoided, or removed from the atmosphere.

Credits originate from various types of projects, such as renewable energy, reforestation, energy efficiency, carbon capture and underground storage (“CCUS”), methane capture and reclamation, and more, each with its own standards and methodologies for calculating emission reductions.

Carbon credits are often certified under specific standards or protocols that ensure their environmental integrity and quality. Common standards provide guidelines on how to quantify, monitor, and verify emission reductions.

Projects undergo rigorous verification by an independent third-party verifier (“TPV”) to ensure that the emission reductions are real, measurable, permanent, and additional.

Registries are registered in a public or private registry that track the creation, ownership, and retirement of each carbon credit, ensuring transparency and preventing double-counting.

Each credit has a unique serial number, allowing buyers to trace its origin, verify its legitimacy, and ensure it has not been double-counted or double-sold.

The end-use of a carbon credit is for offsetting purposes, allowing individuals or companies to compensate for their emissions. Once used for offsetting, a credit is retired in the registry to ensure it is not resold.

The purchase and sale of carbon credits involve legal agreements detailing terms and conditions, such as the volume of credits, price, delivery date, and payment terms.

The market value of a carbon credit is determined by supply and demand dynamics in the carbon market. Factors influencing the value include the type of project, its location, co-benefits, and current market trends.

Many carbon credits come with additional benefits beyond carbon reduction, such as improving local air quality, preserving biodiversity, or contributing to local communities' sustainable development goals.