Explainer

One carbon credit, one tonne of CO₂e.

A carbon credit is a tradable certificate for one tonne of greenhouse gas kept out of the atmosphere or taken back out of it. This guide covers where credits come from, how they are tracked, what moves their price and how you use one.

What a credit stands for

Every credit represents one tonne of carbon dioxide equivalent, written CO₂e. Other greenhouse gases, such as methane, nitrous oxide and the fluorinated gases, are converted to CO₂e by how much warming they cause compared with carbon dioxide. A tonne of methane therefore counts as many tonnes of CO₂e.

Credits come from projects that cut, avoid or remove emissions: a landfill that captures its methane, a protected forest, a cookstove programme, a reforestation site. The project follows the rules of a carbon standard, an independent auditor checks its results, and a registry issues one credit for each verified tonne.

An organisation buys credits to balance emissions it cannot yet cut. The claim is only made when the credit is retired, which takes it out of circulation for good.

Types of credit

Avoided, reduced or removed

Every credit is one tonne, but not every tonne is the same kind. The type tells you what actually happened in the atmosphere.

Avoidance

Stops emissions that would otherwise have happened. Examples include protecting a forest at risk of clearing, or renewable power that displaces fossil generation. The tonne is measured against a baseline of what would have occurred without the project.

Reduction

Cuts emissions from a source that already exists. Capturing and destroying landfill methane, abating industrial gases and switching to cleaner cookstoves all fall here. Reduction and avoidance credits are often grouped together.

Removal

Takes CO₂ that is already in the atmosphere and stores it. Nature-based removals include new forests and soil carbon. Engineered removals include biochar and direct air capture with geological storage. Storage times range from decades to many centuries.

Each type has a place. Avoidance and reduction projects deliver cuts now, often at lower cost. Removals deal with carbon already emitted. Some net-zero frameworks expect the emissions a company still has at the end of its transition to be balanced with removals, so it pays to know which type you hold.

Life of a credit

From project to retirement

Whatever the standard, a credit passes through the same four stages.

01

Certify

The project registers with a standard and applies an approved methodology. An independent body validates the design.

02

Issue

Results are monitored and verified. The registry then issues one credit per tonne, each with its own serial number and vintage.

03

Trade

Credits change hands between registry accounts. Every transfer is recorded, so ownership is never in doubt.

04

Retire

The owner retires the credit against an emission. It leaves circulation for good and can never be sold again.

Who does what

Reading a credit's record

These are the parties and terms you will see on any registry entry.

Standard
The programme that writes the rules and approves methodologies, such as the UN's Clean Development Mechanism, Gold Standard, Verra's Verified Carbon Standard or the BioCarbon Standard.
Sets the rules
Validation and verification body
An accredited, independent auditor. It checks the project design before it starts, then verifies the tonnes it reports.
Checks the work
Registry
The database that issues credits and records every transfer and retirement. Each standard runs or appoints its own.
Issues and tracks
Serial number
A unique code for each credit. Depending on the registry, it identifies the project, the vintage and the issuance batch.
One per tonne
Vintage
The year in which the reduction or removal took place. It is not the year the credit was issued or bought.
When it happened
Retirement
The final step, also called cancellation. The credit is used against an emission and permanently taken out of circulation.
Used once
Retirement

Why a retired credit can never be sold again

When you retire a credit, the registry moves it into a retirement account and marks its serial number as used. The record usually shows who the credit was retired for, why and on what date.

From that point the credit cannot be transferred. That is what stops the same tonne being sold twice or claimed by two organisations. Most registries publish their retirements, so anyone can check that a claim is backed by a real, retired credit.

Until you retire it, a credit is an asset you can hold or sell on. After you retire it, it is evidence for your claim.

Tall stacks of paper files and folders in an office
1 : 1
Credit : tonne
Unique
Serial number
Once
Retired for good
Markets

Voluntary and compliance markets

Credits are bought for two broad reasons: because an organisation chooses to, or because a rule requires it. The two markets overlap, and the same project can sometimes supply both.

Palm trees in morning mist Voluntary market

Bought by choice

Companies, public bodies and individuals buy credits to meet their own climate targets or to back a claim about a product, an event or a whole business. Independent standards set the rules for how credits are made, and buyers decide which ones meet their requirements.

Who buys
Organisations & individuals
Why
Own targets and claims
Rules set by
Independent standards
On CTX
Spot trading since 2009
An industrial plant lit up at night Compliance

Bought because a rule requires it

In compliance markets, a government or international body sets a legal obligation. Emissions trading systems require covered companies to hold allowances, and some schemes accept certain carbon credits for part of an obligation.

The Clean Development Mechanism, created under the Kyoto Protocol, let projects in developing countries earn Certified Emission Reductions (CERs) for use by countries with Kyoto targets. CERs have also long been bought voluntarily. Under the Paris Agreement the CDM is being wound down, and eligible projects can move to the new Article 6.4 mechanism.

Who buys
Regulated entities
CDM units
CERs
CDM origin
Kyoto Protocol
CDM today
Winding down
Government buildings with national flags flying outside Paris Agreement

Trading between countries

Article 6 of the Paris Agreement lets countries use emission cuts made abroad towards their national targets. Under Article 6.2, countries agree transfers between themselves of Internationally Transferred Mitigation Outcomes, or ITMOs. The selling country makes a corresponding adjustment to its own accounts, so the tonne is only counted once.

Article 6.4 sets up a UN-supervised crediting mechanism, the successor to the CDM. Countries agreed the detailed rules for both routes at COP29 in 2024. CTX launched its ITMO Registry at COP25 in 2019.

Article 6.2
Country-to-country ITMOs
Article 6.4
UN-supervised mechanism
Safeguard
Corresponding adjustments
Unit
1 ITMO = 1 t CO₂e
About the ITMO Registry
A braided river meeting the sea, seen from the air Aviation

Offsetting for international flights

CORSIA is the Carbon Offsetting and Reduction Scheme for International Aviation, run by the UN's International Civil Aviation Organization (ICAO). Airlines offset growth in CO₂ from international flights above a set baseline. Only credits that ICAO has approved as CORSIA-eligible emissions units count.

Run by
ICAO
Pilot phase
2021–2023
First phase
2024–2026
Second phase
2027–2035
Offsetting routes for aviation
Price

Why two credits can carry very different prices

There is no single price for a tonne of carbon. Each credit is priced on what stands behind it.

Project type

What the project does matters most. Removals usually cost more than avoidance or reduction, and engineered removals with long-term storage sit at the top of the range. The cost of running the project feeds through to the price.

Standard

The standard and methodology behind a credit affect how buyers rate it.

Location

The host country, and the local benefits a project brings to people and nature, shape demand.

Vintage

Buyers often prefer recent vintages, so older credits tend to trade lower.

Eligibility

Credits that qualify for a scheme, such as CORSIA, or that carry Article 6 authorisation can attract a premium.

On CTX, sellers set their own asking prices and buyers see them live on the exchange, so you can compare credits side by side before you buy.

A price chart with candlestick bars on a dark screen
100 t
Minimum trade
T+0
Settlement
24/7
Trading
Buying on CTX

How to buy credits on the exchange

CTX is a spot exchange: you buy credits for cash at the price the seller has listed, and they reach your registry account the same day.

  • Apply online, then send photo ID and a bank statement from the last three months
  • Receive your signed trading agreement and access code
  • Fund your account and buy from 100 tonnes per trade
  • Retire the credits against your footprint, or hold them and sell them on
For buyers → How the exchange works
Next step

Know what to look for before you buy

Open an account to start trading, or read our guide to the questions worth asking about any credit.

Open an account → Carbon credit integrity