Frequently asked questions about carbon credits

A carbon credit is a tradable certificate representing one metric tonne of carbon dioxide equivalent (CO2e) that a project has reduced or removed beyond what would have happened anyway, verified by an independent auditor.

Each credit carries a unique serial number on a registry that tracks it from issuance to retirement. Programmes name their credits differently: Verra issues Verified Carbon Units, Gold Standard issues Verified Emission Reductions and India’s scheme issues Carbon Credit Certificates.

Sources: VCMI, Claims Code of Practice v3.1, August 2025 (opens in a new tab) · Verra, Verified Carbon Standard (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab) · Bureau of Energy Efficiency, Carbon Market (opens in a new tab)

One carbon credit equals one metric tonne of carbon dioxide equivalent, which is 1,000 kg of CO2e.

Other greenhouse gases count by their global warming potential over 100 years. For reductions and removals from 2021 on, Verra converts them with the IPCC’s Fifth Assessment values, which count one tonne of methane as 28 tonnes of CO2e. The Paris Agreement’s reporting rules use the same values.

A tonne of carbon is not a tonne of CO2. The IPCC converts carbon to CO2 by the ratio of their molecular weights, 44/12, so one tonne of carbon stored in trees or soil corresponds to about 3.67 tonnes of CO2.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab) · UNFCCC, Common metrics (opens in a new tab) · IPCC AR5 WGI, Chapter 8, Table 8.A.1 (opens in a new tab) · IPCC 2006 Guidelines, Volume 4, Chapter 2 (opens in a new tab)

India’s own Carbon Credit Certificates had no published price yet when the World Bank reported in 2026, while most internationally traded credit types sold for US$1 to US$14 per tonne.

Credits eligible for CORSIA, the international aviation scheme, fetched more: their price fell from US$22 per tonne in September 2025 to below US$15 in April 2026. Among the project types sold on the spot market, nature based removals such as afforestation, reforestation and revegetation had the highest average price in 2025, US$14 per tonne. Engineered removals such as direct air capture were priced at US$400 to US$600 per tonne in agreements to buy future credits.

Prices vary with the project type and the region it comes from. The World Bank also finds growing evidence that projects rated higher by rating agencies sell for more.

India’s certificates are to be traded on power exchanges, under business rules approved by the Central Electricity Regulatory Commission. The World Bank expected their first trading period later in 2026.

Sources: World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab) · Bureau of Energy Efficiency, Carbon Market (opens in a new tab)

A carbon credit is the unit, one tonne of CO2e reduced or removed. An offset is one use of it: a buyer retires the credit to counterbalance emissions of its own.

The Oxford Offsetting Principles note that the words are often used interchangeably but keep them apart, because credits may also be used for purposes other than offsetting.

Sources: Oxford Offsetting Principles, revised 2024 (opens in a new tab) · VCMI, Claims Code of Practice v3.1, August 2025 (opens in a new tab) · IPCC AR6 WGIII, Annex I Glossary (opens in a new tab)

For an emission reduction project, a methodology calculates credits as baseline emissions minus project emissions minus leakage: what would have been emitted without the project, less what the project emits, less emissions it pushes elsewhere.

Removal projects such as tree planting count the carbon dioxide removed beyond the baseline, less leakage.

Methodologies can also require conservativeness deductions for uncertainty. Under Verra, agriculture, forestry, land use and geological storage projects also deposit a share of their credits into a pooled buffer account that covers the risk of stored carbon being lost.

Each methodology sets its own formulas for one type of activity, so a cookstove project and a forest project are calculated differently.

Sources: UNFCCC CDM, methodology AM0057 (opens in a new tab) · Verra, VCS Program Definitions v5.0 (opens in a new tab) · Verra, VCS Methodology Requirements v5.0 (opens in a new tab) · Verra, Registration and Issuance Process v5.0 (opens in a new tab)

Some do and some do not: the Oxford Offsetting Principles (2024) cite analyses that found overcrediting in the most common types of carbon credit project, so it depends on the credit and how it is used.

To help buyers tell them apart, the Integrity Council for the Voluntary Carbon Market (ICVCM) set ten Core Carbon Principles for identifying high quality credits with real, verifiable climate impact. One of them is additionality: the reductions must not have happened without the incentive of carbon credit revenue.

Programmes the ICVCM approves can put a CCP label on credits from methodology categories it has approved, a label designed to make it easier for buyers to tell credits apart.

On the buyer’s side, the VCMI Claims Code guides companies to use credits above and beyond science aligned cuts to their own emissions.

Sources: Oxford Offsetting Principles, revised 2024 (opens in a new tab) · ICVCM, Core Carbon Principles (opens in a new tab) · VCMI, Claims Code of Practice (opens in a new tab)

Choose a programme and a methodology that fits the activity, write a project design document, list it for public comment, pass validation by an independent auditor and register, then monitor and pass verification before credits are issued.

Each programme sets deadlines for these steps, so timing matters from the day the project starts. Gold Standard requires validation within two years of a project being listed.

Verra’s VCS Standard v4.7 sets the start date deadlines for registration requests made before 1 January 2027. Projects outside agriculture, forestry and other land use must complete validation within two years of their start date. Agriculture, forestry and other land use projects must begin pipeline listing within three years and complete validation within five. The limit is eight years for projects of 20,000 tonnes a year or less and for afforestation, wetland restoration and improved forest management projects.

For pipeline listing requests from 1 January 2027, Verra’s version 5 rules require listing within one year of the initial crediting period start date.

To start one with EarthCare, email contact@earthcareecosystems.org with the location, the activity, the approximate scale and the stage the project has reached.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Gold Standard, Principles and Requirements v2.1 (opens in a new tab) · Verra, VCS Standard v4.7 (opens in a new tab) · Verra, VCS Version 5 updates and effective dates (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab)

A farmer or landowner can earn from carbon credits by joining a grouped project, where one registered project enrols many farms or plots and adds new ones after registration.

Credits are issued into the project proponent’s registry account, so what the farmer receives depends on the contract with the proponent.

The proponent must show the legal right to carry out the activity. For projects starting before 1 January 2027, Verra’s VCS Standard v4.7 asks for the legal right to control and operate it. Its version 5 rules, for projects starting on or after that date, also require the right to the reductions and removals themselves.

In India, the Bureau of Energy Efficiency lists agriculture and forestry among the first phase sectors of the Offset Mechanism. The methodologies approved by March 2025 include one for mangrove afforestation and reforestation. On any route, credits are issued only after monitoring and independent verification.

Sources: Verra, VCS Program Definitions v5.0 (opens in a new tab) · Verra, Registration and Issuance Process v5.0 (opens in a new tab) · Verra, VCS Standard v4.7 (opens in a new tab) · Verra, VCS Version 5 updates and effective dates (opens in a new tab) · Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · PIB, India’s Carbon Offset Plan, 28 March 2025 (opens in a new tab)

Not on their own: an individual’s activity, such as a household’s clean cookstove, counts only as one instance of a grouped project or programme of activities, which registers once and adds new households or sites over time.

Credits are deposited into the project proponent’s registry account. Any payment to households depends on the contracts the proponent offers them.

Cutting a personal footprint does not create credits: a credit has to come from a registered project and be verified.

Sources: Verra, VCS Program Definitions v5.0 (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab) · Verra, Registration and Issuance Process v5.0 (opens in a new tab)

There is no fixed number per acre or hectare: credits come from the tonnes of CO2 a project removes above its baseline, calculated under the methodology it uses.

The result depends on growth on that land, what the land would have held without the project, leakage, uncertainty deductions and the share set aside in the buffer pool. A tonne of carbon in wood corresponds to about 3.67 tonnes of CO2.

Small sites can join a grouped project, which registers once and then adds new plots that meet its eligibility criteria.

Sources: Verra, VCS Program Definitions v5.0 (opens in a new tab) · Verra, VCS Methodology Requirements v5.0 (opens in a new tab) · Verra, Registration and Issuance Process v5.0 (opens in a new tab) · Verra, Verified Carbon Standard (opens in a new tab) · IPCC 2006 Guidelines, Volume 4, Chapter 2 (opens in a new tab)

There is no fixed timeline: credits are issued only after a project is validated, registered, monitored for a period and verified.

Verra says validation alone can take up to a year and in rare cases longer. Its own review of a registration or verification request can then take up to 40 business days, plus up to 20 for each further round. A review may take two or three rounds.

Gold Standard sets outer limits: validation within two years of listing and the first verification within two years of the implementation date or design certification, whichever is later.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Gold Standard, Principles and Requirements v2.1 (opens in a new tab)

Under Verra’s Program Fee Schedule v1.2 (15 September 2026), a VCS project pays US$1,500 to list, US$3,750 for registration review, US$5,000 per verification review and an issuance levy of US$0.23 per tonne claimed.

Verra also charges US$750 to open a registry account and US$750 a year to keep it. Half of each verification review fee is a prepayment credited against later issuance levies.

Gold Standard’s Fee Schedule v3.1 (28 July 2025) charges US$1,000 for the preliminary review at listing, US$2,500 for design review at registration, US$2,000 per performance review and US$0.25 per credit at issuance under its cash option, plus US$1,000 a year for a registry account.

The validation and verification body is contracted directly by the project, so its audit fees come on top. Project design, monitoring and consultants add to the total.

Sources: Verra, Program Fee Schedule v1.2, 15 September 2026 (opens in a new tab) · Gold Standard, Fee Schedule v3.1, 28 July 2025 (opens in a new tab) · Verra, Verified Carbon Standard (opens in a new tab)

A project gets paid when it sells its credits to a buyer under a contract made outside the registry, usually after the registry deposits the issued credits into the project proponent’s account.

Some buyers pay earlier. In a forward offtake agreement, as the World Bank describes it, the buyer pays upfront at a discount for credits delivered later and the developer bears the delivery risk.

How the money is shared between landowners, developers and investors is set by their contracts. For projects starting on or after 1 January 2027, Verra’s version 5 rules also require the proponent to design a benefit sharing mechanism jointly with affected land or resource rights holders and to give them projected revenues and costs.

Sources: Verra, Registration and Issuance Process v5.0 (opens in a new tab) · World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab) · Verra, VCS Version 5 updates and effective dates (opens in a new tab)

The CCTS is India’s domestic carbon market, administered by the Bureau of Energy Efficiency. Each Carbon Credit Certificate it issues represents one tonne of CO2e reduced or removed.

It has two mechanisms. The compliance mechanism sets greenhouse gas emission intensity targets for obligated entities. The Bureau of Energy Efficiency names nine sectors to be considered for gradual transition into it: aluminium, chlor alkali, cement, fertiliser, iron and steel, pulp and paper, petrochemicals, petroleum refining and textiles.

By the World Bank’s 2026 report, seven sectors covering 490 industries had been notified with emission intensity targets for 2026 and 2027. Iron and steel was still to follow.

The offset mechanism lets other entities register projects that reduce, remove or avoid emissions. Grid Controller of India operates the registry and the Central Electricity Regulatory Commission regulates trading.

Sources: Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab)

Yes, carbon trading is legal in India: the Energy Conservation (Amendment) Act, 2022 empowers the Central Government to specify a carbon trading scheme. The government notified the Carbon Credit Trading Scheme, 2023 in June 2023.

Carbon Credit Certificates are issued on the Indian Carbon Market registry and are to be traded on power exchanges, under rules the Central Electricity Regulatory Commission approves. The World Bank expected the first trading period later in 2026.

The compliance mechanism is mandatory only for the entities the government names as obligated. The offset mechanism is voluntary.

Indian projects have long sold credits through international programmes too: the Bureau of Energy Efficiency notes that Indian agencies registered the second largest number of CDM projects in the world.

Sources: Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · PIB, India’s Carbon Offset Plan, 28 March 2025 (opens in a new tab) · World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab)

Under India’s offset mechanism, a project registers under the Bureau of Energy Efficiency’s Detailed Procedure for the Offset Mechanism, using an approved methodology and a project design document validated by an Accredited Carbon Verification Agency.

The Bureau publishes draft project design documents for public comment before registration.

The Government of India approved the Detailed Procedure and eight methodologies by March 2025. They include renewable energy (including hydro and pumped storage), green hydrogen production, industrial energy efficiency, landfill methane recovery and mangrove afforestation and reforestation. Certificates are issued on the Indian Carbon Market registry.

A project can register with an international programme such as Verra or Gold Standard instead. Each route has its own methodologies, verifiers and registry.

Sources: Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · PIB, India’s Carbon Offset Plan, 28 March 2025 (opens in a new tab) · Bureau of Energy Efficiency, draft PDD notice under the Offset Mechanism (opens in a new tab)

In India, Carbon Credit Certificates under the CCTS are to be traded on power exchanges, while credits from international programmes such as Verra are sold to buyers under contracts made outside the registry.

A credit reaches a buyer only once it is issued, though some buyers agree forward purchases earlier. Buyers can look up a credit’s issuance on the programme’s public registry before paying. Verra’s registry shows every project and unit without a login.

Sources: Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab) · Verra, Registry FAQs (opens in a new tab)

Most carbon credits are used voluntarily: credits retired for voluntary purposes made up about 82 percent of all retirements in 2025, according to the World Bank.

Other buyers use credits for compliance. Airlines buy them under CORSIA, which requires covered airlines to offset the growth in their CO2 emissions beyond 2019 levels. Some domestic schemes, such as California’s, also accept credits for compliance. Countries buy internationally transferred mitigation outcomes under Article 6.2 of the Paris Agreement to help meet their national targets.

In India, obligated entities that miss their emission intensity targets under the CCTS must buy or surrender certificates to cover the shortfall. The World Bank noted in 2026 that no decision had been taken on whether certificates from the offset mechanism can count toward those obligations.

Sources: World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab) · Bureau of Energy Efficiency, Carbon Market (opens in a new tab) · UNFCCC, Article 6.2 (opens in a new tab)

Both are nonprofit standard setters with their own rules, methodologies and registries, but Gold Standard also requires every project to show positive impacts on at least three Sustainable Development Goals, one of which must be SDG 13 on climate.

Verra runs the Verified Carbon Standard Program, which it calls the world’s most widely used greenhouse gas crediting program. Its credits are Verified Carbon Units.

Gold Standard is a Swiss nonprofit founded by a group of NGOs. In July 2017 it published Gold Standard for the Global Goals, its standard for quantifying and certifying impacts toward climate security and sustainable development. Its credits are Verified Emission Reductions.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Gold Standard, Principles and Requirements v2.1 (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab) · Gold Standard for the Global Goals (opens in a new tab)

A methodology is the rulebook for one type of project: the criteria and procedures for identifying the project boundary, determining the baseline, demonstrating additionality, quantifying reductions or removals and specifying monitoring.

Each methodology covers a specific set of activities for a distinct project type, so a project first needs one that fits what it does.

Sources: Verra, VCS Program Definitions v5.0 (opens in a new tab) · Verra, Verified Carbon Standard (opens in a new tab)

PDD stands for project design document: the document a developer prepares to describe a project against a programme’s requirements, which an independent auditor then validates.

The CDM, Gold Standard and India’s offset mechanism call it a PDD. Verra calls its equivalent a project description, written on the VCS Project Description Template or another template Verra makes available.

Sources: Gold Standard, FAQs and Glossary (opens in a new tab) · UNFCCC CDM, project cycle procedure v03.0 (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab) · Bureau of Energy Efficiency, draft PDD notice under the Offset Mechanism (opens in a new tab)

MRV stands for measurement, reporting and verification: collecting data over time from field measurements, observations, remote sensing or interviews, reporting the results in set formats and having the reports verified.

Gold Standard uses the same initials for monitoring, reporting and verification, the system that underpins its principle of demonstrating real outcomes.

Sources: IPCC AR6 WGIII, Annex I Glossary (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab)

Carbon credits are verified by an independent validation/verification body (VVB), which checks a project’s monitored results against its monitoring plan before the programme issues credits.

Verra requires its VVBs to be accredited under ISO 17029 or ISO 14065 by an International Accreditation Forum member and approved by Verra. Under the CDM and the Paris Agreement’s crediting mechanism the auditors are called designated operational entities. Under India’s CCTS they are Accredited Carbon Verification Agencies.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Verra, VCS Program Guide v5.0 (opens in a new tab) · UNFCCC CDM, Designated Operational Entities (opens in a new tab) · UNFCCC, Article 6.4 accreditation (opens in a new tab) · Bureau of Energy Efficiency, Carbon Market (opens in a new tab)

Additionality means the emission reductions or removals would not have happened without the incentive created by carbon credit revenue.

Verra adds that the reductions must exceed what a business as usual scenario would achieve.

Sources: ICVCM, Core Carbon Principles (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab)

Article 6 lets countries cooperate on their climate targets: Article 6.2 covers transfers of mitigation outcomes between countries, Article 6.4 creates a UN crediting mechanism and Article 6.8 covers approaches that do not use markets.

A corresponding adjustment prevents double counting: when a country transfers a reduction toward another country’s target, it takes that reduction out of its own count.

In 2024, India’s National Designated Authority for the Implementation of Article 6 of the Paris Agreement finalised an updated list of 14 activities to be considered for trading international carbon credits under Articles 6.2 and 6.4.

Sources: UNFCCC, Article 6 of the Paris Agreement (opens in a new tab) · Paris Agreement (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab) · PIB, MoEFCC year end review, 27 December 2024 (opens in a new tab)

A carbon project developer takes a project through a crediting programme: it finds a methodology, prepares the project design document, contracts the independent auditor for validation and verification, holds the registry account and requests issuance.

Gold Standard, for example, requires the project developer to prepare the PDD and open an account on its Impact Registry.

Sources: Verra, Verified Carbon Standard (opens in a new tab) · Gold Standard, Principles and Requirements v2.1 (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab)

Check a developer’s record on public registries: Verra’s registry shows every project and issued unit without a login, so you can see which of its projects reached issuance.

Ask who will hold the right to the reductions and removals, which Verra’s version 5 rules require the proponent to hold for projects starting on or after 1 January 2027.

Treat guaranteed volumes with caution: credits are issued only after independent verification. The World Bank notes that not every project behind an agreement to buy future credits will be fully implemented.

Sources: Verra, Registry FAQs (opens in a new tab) · Verra, VCS Standard v5.0 (opens in a new tab) · Verra, VCS Version 5 updates and effective dates (opens in a new tab) · Verra, Verified Carbon Standard (opens in a new tab) · World Bank, State and Trends of Carbon Pricing 2026 (opens in a new tab)

AI can help a project team read the long documents a carbon project runs on and screen them against the methodology’s requirements, so gaps can be found and fixed before an independent auditor reviews them.

That is possible because a methodology sets criteria for the boundary, the baseline, additionality, quantification and monitoring, so every claim in a project design document has a requirement to answer to.

EarthCare is building Pramana, an AI platform for carbon projects that shows its working, for the developers, validators, verifiers and buyers of carbon credits.

Sources: Verra, VCS Program Definitions v5.0 (opens in a new tab) · Gold Standard, FAQs and Glossary (opens in a new tab)

Both are coming soon: the EarthCare Ecosystems website is under redevelopment and Pramana, EarthCare’s AI platform for carbon credits, is in development.

To hear when they launch, write to contact@earthcareecosystems.org.

Source: EarthCare Ecosystems