Carbon credits: what are they, what do they cost and how do you buy or sell them?

Companies receive offers of "climate neutrality" for a few euros per tonne. Farmers receive contracts to sell the carbon stored in their soil. Both hear the same term: carbon credit. The prices do not add up. In 2025, an allowance to emit one tonne of CO₂ in the EU Emissions Trading System cost about €74 on average (ICAP, 2025). An average carbon credit on the voluntary market cost $3.5 (MSCI, 2025).

• Carbon credit: a tradable certificate for one tonne of CO₂e that was avoided or removed from the atmosphere.
• Not an emission allowance: companies covered by the EU ETS cannot use credits to cover their emissions.
• Price: from a few dollars for a reduction to over a hundred for a permanent removal of one tonne.
• Buying: makes sense only after you cut your own emissions, and does not justify a "neutral" label on a product.
• Selling: farmers can sell credits from soil carbon, so far in commercial programmes, as EU certification is just starting.

What are carbon credits?

A carbon credit equals one tonne of carbon dioxide equivalent (1 t CO₂e) that a specific project avoided or removed from the air. Each credit has a serial number. It is recorded in the registry of the programme that issued it, such as Verra or Gold Standard. So you can see which project it comes from, the year of the reduction and who owns it. No law regulates these projects today, and the market is voluntary.

Each credit goes through five steps:

1. Project and method: the developer chooses a method from the programme. It describes the baseline: what would happen without the project.
2. Validation: an independent body checks the assumptions before the project starts to issue credits.
3. Monitoring and verification: the project measures its effects, and an auditor confirms how many tonnes were really avoided or removed.
4. Issue: the programme records as many credits in the registry as the verification confirmed.
5. Retirement: the buyer takes the credit off the market in its own name. Only then can the buyer claim it.

A carbon credit that is still on the market can be sold on, so buying it does not compensate anything yet. Programme registries are public, for example the Verra registry and the Gold Standard registry. With the serial number, you can check whether a credit was retired, and for whom.

In everyday language, a carbon credit is often called an offset. Strictly speaking, an offset is one way to use a credit: to compensate for emissions. We describe compensation itself in carbon offsetting in a nutshell.

How does a carbon credit differ from an emission allowance?

People often confuse the two, because both concern one tonne of CO₂ and both have a price. But they work on completely different rules:

Source of the allowance price: ICAP. Since 2021, the fourth trading phase, the EU ETS no longer accepts even units from UN mechanisms (CERs and ERUs). Before, these could partly replace allowances. The UK ETS does not accept international credits either. So in Europe, carbon credits trade only on the voluntary market. Outside Europe, regulated systems also use them. Examples are CORSIA for international aviation and deals between countries under Article 6 of the Paris Agreement.

How do carbon credits differ from guarantees of origin?

A carbon credit proves that one tonne of CO₂e was avoided or removed somewhere outside your company. You use it to compensate for emissions. A guarantee of origin proves that 1 MWh of energy, for example electricity, came from a renewable source. You use it to account for the power your company used.

So in a carbon footprint calculated with the market-based method, a guarantee can lower Scope 2 emissions. A credit never lowers the footprint, because you report it separately. The same applies to EPDs: power with guarantees can lower the result, under the programme rules, but a credit cannot. We explain when guarantees are worth buying in our article on guarantees of origin.

What types of carbon credits are there?

Credits are grouped mainly by what the project did:

• Reduction credits: the project cuts greenhouse gas emissions or prevents them. Examples are a wind farm or other renewable energy, methane capture at a landfill, protecting forests from logging and more efficient cooking stoves.
• Removal credits: the project removes CO₂ from the atmosphere and stores it. This is carbon sequestration, for example planting forests, storing carbon in soil, biochar, or direct air capture with geological storage.

The second split is about how long the carbon stays stored. Carbon in trees and soil can return to the atmosphere after a fire, logging or ploughing. So nature-based projects need buffer reserves and long monitoring. Carbon locked in biochar or turned into minerals underground stays stored for centuries, and you can see this in the price.

Reductions dominate the global market today. According to MSCI, buyers retired 202 million credits worldwide in 2025. About 90% came from reduction projects, and almost all removals came from nature-based projects. Renewable energy credits were the most popular a few years ago. In 2025, they made up less than a quarter of retirements.

Offers also use short names for the units:

• VCU: a credit issued by the Verra programme;
• VER: a general name for a voluntary market credit, used for example by Gold Standard;
• CER: a unit from the UN Clean Development Mechanism, from the time of the Kyoto Protocol.

How much do carbon credits cost?

There is no single price. A tonne from a wind farm in Asia and a tonne stored underground in Iceland are two different products. The MSCI indices for 2025 give a point of reference:

• Market average: $3.5 per tonne, less than a year earlier ($4.3).
• Credits rated BBB and higher: $6.8 per tonne, over 20% more than in 2024.
• Permanent technology-based removals: usually over $100 per tonne. According to a 2026 survey by CDR.fyi, most methods will not fall below this level by 2030.

Price depends more and more on quality. At the end of 2025, credits with higher ratings cost on average about 360% more than weaker ones. Apart from quality, the price depends on:

• project type: a removal costs more than a reduction, and technology costs more than nature;
• vintage: credits from reductions made several years ago are cheaper and harder to defend;
• location and co-benefits: projects in Europe, and projects that support local communities or biodiversity, cost more;
• volume and type of contract: large orders and contracts for future delivery are negotiated one by one.

How do you judge the quality of a carbon credit?

A cheap credit usually means that the emission cut exists mainly on paper. In 2023, The Guardian published an investigation into rainforest credits certified by Verra. It found that over 90% of them might not match real cuts. Since then, buyers who look for high-quality carbon credits ask about criteria such as:

• Additionality: the reduction would not happen without the money from selling credits.
• A realistic baseline: the project does not inflate the emissions that would occur without it.
• Permanence: the carbon stays stored, and a buffer reserve covers the risk of release.
• No leakage: protecting one forest does not move logging to the forest next door.
• No double counting: a country and a company do not both claim the same tonne.
• Measurement and independent checks: the effect was measured with the programme method and checked by an outside auditor.

It is hard to judge each project on your own, so the market has made two shortcuts. The first is the CCP label. The Integrity Council for the Voluntary Carbon Market (ICVCM) gives it to programmes and methods that meet its Core Carbon Principles. The second is ratings from agencies such as MSCI, Sylvera or BeZero. Neither replaces reading the project documents. But both quickly filter out the weakest offers.

How can a company use carbon credits?

Carbon credits do not reduce a company's carbon footprint. The emissions in the inventory stay the same, and the GHG Protocol asks you to show credits separately. This leads to four rules:

1. Reduce first: ISO 14068-1, the standard on reaching carbon neutrality, allows you to offset only the emissions you could not avoid. We write more about this in our article on carbon neutrality and climate neutrality.
2. Not for SBTi targets: credits do not count towards reduction targets. In the net zero year, you must neutralise residual emissions with permanent CO₂ removals. The standard does encourage you to fund action outside your value chain. More in our guide to the SBTi Net-Zero Standard V2.0.
3. Be careful in communication: the EmpCo directive bans claims that a product has a neutral or positive climate impact because of offsets. EU countries must apply the ban from 27 September 2026.
4. Not in an EPD or a product carbon footprint: EN 15804 and ISO 14067 exclude offsets from the results. This applies even to credits from permanent CO₂ removals.

A manufacturer may describe the credits it bought in an environmental product declaration (EPD) only separately, in the part with additional environmental information. The International EPD System instructions, among others, allow this directly. The results of the declaration stay the same.

Carbon stored in the product itself is different, for example in wood or in biochar added to concrete. It goes into the calculation, but EN 15804+A2 treats it as temporary storage. The uptake in modules A1–A3 is balanced by emissions at the end of the product's life. So over the whole life cycle, the balance is zero.

You may, however, talk about what your company really did. Say how many tonnes it cut, how many credits it retired, from which project and for what purpose. We show how to build such messages without risk in our guide on how to avoid greenwashing.

How do you buy carbon credits?

You can buy carbon credits directly from a project developer, through a broker or on a trading platform. Whatever the channel, the order is the same:

1. Calculate your emissions and a reduction plan: without a corporate carbon footprint, you do not know how many tonnes to buy, or why.
2. Set the purpose: offsetting residual emissions, funding climate action outside your value chain, or a customer requirement.
3. Choose the type of credit: removals suit the neutralisation of residual emissions; reductions also suit project funding.
4. Check the project in the registry: its method, vintage, verification status, CCP label and agency ratings.
5. Ask for retirement in your company's name: with the purpose and the serial numbers; keep the confirmation as evidence.
6. Describe it honestly: in your report and your communication, show reductions and credits separately.

Can a farmer earn money from carbon credits?

Yes, but for now only in commercial programmes. The farmer changes farming practices so that the soil stores more carbon (sequestration) or emits less greenhouse gas. The programme measures the effect, issues credits and sells them to companies. In Europe, programmes such as Agreena and eAgronom work with farmers. The sustainable practices they reward most often are:

• no-till or reduced tillage;
• cover crops and plant cover for most of the year;
• less mineral nitrogen fertiliser and better use of manure;
• trees in fields and agroforestry systems.

EU rules for such credits are taking shape. Regulation (EU) 2024/3012, known as the CRCF, sets up EU certification. It covers permanent carbon removals, carbon farming and carbon stored in products. It has applied since December 2024. In July 2026, the European Commission adopted certification methods for agriculture and agroforestry on mineral soils, peatland rewetting and afforestation. Carbon farming under these rules must last at least five years. Once the methods apply, certification schemes can ask for recognition. A central EU registry is due by 2028. The CRCF does not regulate trading: it does not guarantee demand, and selling credits remains a private deal.

The UK is not covered by the CRCF. There, the Woodland Carbon Code and the Peatland Code certify woodland and peatland projects.

Before you sign a contract with a carbon programme, check:

• the length of the commitment, and what happens if the farm goes back to ploughing before it ends;
• who owns the credits, and what share of the price goes to the farm;
• how the effect is measured: soil samples or only a model, and who pays for the tests;
• plans for the CRCF: whether the programme intends to apply for recognition by the European Commission.

Do you want to know how many of your emissions really need offsetting?

Buying credits starts with numbers. A corporate carbon footprint shows where your emissions come from. A decarbonisation strategy shows how much of them you can cut, and how much will really remain to offset.

If your company wants to set targets under the SBTi, we can help with target submission and validation. A green claims audit checks your communication about credits and offsetting.