There is growing public and regulatory pressure for businesses to make net-zero commitments – pledges to reduce the amount of greenhouse gases emitted across their operations. Carbon credits are one tool to help them meet those targets, enabling them to offset emissions with activities such as tree-planting or nature conservation. But what exactly are they and how do they work?

A carbon.credit assigns a monetary value to the amount of CO2 or its equivalent greenhouse gasses (CO2e) that a project prevents from entering the atmosphere, or removes from the air. The credits are then sold to organisations that are legally required or voluntarily seeking to offset their own emissions. The project that earned the credit must have gone through a rigorous process to prove that the avoided or removed emissions were measurable, additional and permanent. It also must be certified as high quality by an internationally recognized standard like the Verified Carbon Standard, or its equivalent.

Projects earn credits through a wide range of activities including forest conservation, reducing energy consumption, renewable electricity generation and waste-to-energy projects. Some are financed by governments and others through private investment or through a voluntary carbon market.

The process to create a carbon credit, from the initial idea through to retirement, can take as little as a year or as long as 10 years. A high quality carbon credit not only mitigates climate change but also has a host of other benefits for the local community such as improved health and education, infrastructure development and job creation.

Carbon projects typically start with an idea for a project that avoids or removes GHG emissions through a variety of methods including nature-based solutions, health & livelihood interventions and sustainable infrastructure. We work with project proponents to turn their ideas into a fully fleshed out Project Design Document (PDD) that can be registered with an internationally-recognized carbon standard such as the Verified Carbon Standard. This involves rigorous due diligence that assesses the project's feasibility, risks and ensures that the projects benefits are measurable, additional, permanent and unique.

After a project is certified as high quality, it's then issued on a publicly-available registry so that organisations can purchase it. Each credit represents a tonne of CO2e that has been prevented from entering the atmosphere, or that has been removed and not replaced. This is known as the permanence of carbon credits and is one of the key requirements for them to be able to be used to meet an organisation's emission reduction targets.

To use carbon credits to meet their emissions targets, businesses buy them from specialist carbon market'retailers' such as Climate Impact Partners. The retailers have the systems and processes to assess carbon project quality, source the best projects and create and manage portfolios of carbon credits for end buyers. End buyers are often large businesses and organisations who have more ambitious climate goals than they can deliver through their internal reductions alone. These companies and individuals are buying carbon credits to demonstrate that they care about a healthy planet, stronger communities and a more sustainable future.