Carbon Offsets & Credits: Trading for a Better Climate
Understanding how carbon markets work and how they can accelerate climate action
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Section 1 of 5What are Carbon Offsets and Credits?
Carbon offsets and credits are the financial instruments of climate action. When a company or individual cannot reduce their emissions enough to meet their climate goals, they can purchase carbon credits that represent verified emissions reductions from elsewhere. This creates a market that incentivizes investment in clean technologies and conservation projects.
The global carbon market is growing rapidly, with voluntary markets reaching billions of dollars annually and compliance markets (like the EU Emissions Trading System) representing hundreds of billions more. Understanding how these markets work is essential for anyone serious about climate action.
The Power of Markets
Efficiency: Markets find the lowest-cost emissions reductions • Scale: Connects global buyers with local projects • Innovation: Rewards breakthrough technologies • Transparency: Public registries track all transactions
Interactive Carbon Market Navigator
Explore the different types of carbon markets and understand how credits flow from projects to buyers. Click on market types and flow steps to learn more.
How Carbon Markets Work
Company → Offset Project
Company buys carbon credits to offset emissions
Project Developer → Verification Body
Projects generate and verify carbon credits
Seller → Buyer
Credits traded on exchanges or OTC
Credit Holder → Registry
Credits retired to claim emission reductions