12A & 80G registeredTax benefit on donations+91 92264 92263
TopicFor everyoneCarbon credits and markets

Carbon credits explained: what is one carbon credit?

What one carbon credit means, compliance vs voluntary markets, avoidance vs removal, additionality, permanence, registries, ICVCM labels and Article 6, in plain words.

Avoidance credits and removal credits

This difference matters a lot, especially for net zero claims.

  • Avoidance (or reduction) credits pay for emissions that would have happened but did not. Examples: a wind farm that displaces coal power, capturing methane from a landfill, or more efficient cookstoves. The CO2 never entered the air.
  • Removal credits pay for CO2 that is taken out of the air and stored. Examples: growing new forest, restoring mangroves, or engineered methods such as direct air capture with geological storage.

Removals are generally treated as more relevant for balancing the last, hard-to-cut emissions in a net zero plan. Nature-based removals (trees, soils, mangroves) can be reversed by fire, disease, felling or drought, so they carry a permanence risk (see below). Engineered removals with geological storage are more durable but, today, far smaller in volume.

Sources: Verra: Verified Carbon Standard (VCS) Program; Verra: First ICVCM CCP labels now active on the Verra Registry (2024); ICVCM: Core Carbon Principles; ICVCM: Integrity Council approves three cookstove methodologies among latest decisions (2025); Gold Standard for the Global Goals; UNFCCC: The Paris Agreement (2015), Article 6; Ministry of Power / Gazette: Carbon Credit Trading Scheme, 2023, S.O. 2825(E), 28 June 2023 (cited via BEE Detailed Procedure for Compliance Mechanism); CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026

This article was prepared with AI assistance and checked by the GreenEye team against the sources shown in each section.

Want to understand this for your home or company?

Talk to us. We are happy to explain what this means for you in plain words. We do not sell carbon credits and we cannot promise any result, but we can help you think it through.

Talk to us
All in Climate & Carbon