What is a carbon credit?

A carbon credit represents the removal or reduction of one ton of CO₂ equivalent (CO₂eq) from the atmosphere. This standardization is necessary because not all greenhouse gases have the same impact on global warming. To facilitate comparison, the concept of CO₂ equivalent is used, which converts the warming potential of any gas into a common metric.

For example, methane (CH₄) has a warming potential approximately 27 times greater than carbon dioxide, while nitrous oxide (N₂O) is about 273 times more potent. Although CO₂ is the most emitted, accounting for 73% of global emissions, methane accounts for about 17% and N₂O for 6%. This shows how other gases also play a significant role in the climate crisis, even in smaller quantities.

Carbon credits can be divided into two major groups. The first group consists of removal credits, generated when one ton of CO₂ is removed from the atmosphere. This can occur through natural means, such as tree growth through photosynthesis — in planted or regenerated forests — or through more recent and experimental technologies, such as direct air capture of carbon or accelerated weathering of mineral-rich rocks that react with atmospheric CO₂.

The second group consists of reduction credits, which arise when one ton of CO₂ is not emitted due to some change in practice or technology. The most common reduction projects are related to electricity generation from renewable sources, transportation electrification, deforestation prevention, improvements in agricultural practices, and methane emission control in landfills. A well-known example of the economic potential of this type of credit is Tesla, which in 2024 earned 2.3 billion dollars by selling carbon credits generated by its decarbonization actions in the automotive sector.

Carbon credits are, therefore, an attempt to transform the fight against climate change into an economic incentive logic: those who avoid or remove emissions can be compensated for it. However, as we will see in other texts, the effectiveness and integrity of these mechanisms depend on clear rules, robust measurements, and, most importantly, a long-term vision of planetary balance.