Carbon credits explained: what is one carbon credit?

A carbon credit is a tradable certificate that represents one tonne of carbon dioxide equivalent (1 tCO2e) that a project has either kept out of the atmosphere or removed from it. A credit is created only after an independent check, recorded in a registry with a serial number, and retired once used so nobody can count it again.

Photo: "Wind power in south india - panoramio" by Shankaran Murugan, CC BY 3.0, via Wikimedia Commons

Carbon credits are one of the most discussed and most misunderstood tools in climate action. This article explains how they work, what makes one credit better than another, who writes the rules, and why many experts are cautious about them. It describes the market as of October 2026. It does not give prices, and nothing here is investment, tax or legal advice.