Carbon credits can be a powerful tool for climate action, but only if they truly reduce emissions. If you’re reading this, you’ve probably heard about them before and may even have engaged with them in the hopes of mitigating your own (or your company’s) negative impacts on the climate. But despite their popularity, carbon credits are often misunderstood.
They’ve evolved through decades of policy, economics, and environmental science—and not without controversy. Understanding where they come from and how they’ve been used (and misused) is key to making them work the way they’re intended. Today, we take a look at our own approach to carbon credits and carbon offsets. Join us as we walk through how we work to ensure that our carbon offsets count.
A short primer on carbon credits
Created by economists and policy-makers during the 1960s-70s, and officialized in 1997 by the Kyoto Protocol and the Clean Development Mechanism (CDM), carbon credits (a.k.a. Certified Emission Reduction or CER credits) were meant to be a market-based solution allowing organizations to compensate for their harmful emissions by investing in emission-reducing projects. The idea was to incentivize climate action, but the system was flawed and was highly criticised. When carbon credits were new, weak regulations allowed for widespread abuse. Some projects issued credits for emissions reductions that never happened, while others engaged in double counting or generated low-quality credits that failed to deliver real impact and let companies avoid real emission cuts. Factories even artificially produced greenhouse gases just to destroy them for profit!
Over the years, one thing became painfully clear about carbon credits: no carbon credit is alike even though they have been traded as interchangeable units for decades. This means that in order for attempts at emissions reduction via carbon credits to have a real impact, strategies need to be developed to address potential pitfalls. Building a portfolio of carbon-credit-issuing projects that not only address the components of the environment you wish to tackle, but are also high quality, has become essential.
What’s in a name?
The name “carbon credit” represents a certificate claiming that 1 tonne of CO2 has either been removed from the atmosphere or prevented from being released into it in the first place. It sounds simple enough, but here’s the catch: there are a multitude of different ways one could go about sequestering CO2 from the atmosphere or preventing its release. This variance makes it very difficult to create and monitor standards. The result is that credits can vary widely by project type (like forest restoration, renewable energy, or methane capture), certification standard, methodology used, and the degree of transparency and monitoring involved.
Some credits represent clear, measurable, and permanent reductions or removals of carbon emissions. For example, the effort by our partner Terrra to rewild wetlands. Other credits may be based on projections, assumptions, or practices that would have happened anyway. For example, the REDD+ protection projects that avoid deforestation and the carbon release often associated with it.
The most reputable carbon credit certification frameworks employ rigorous methodologies, third-party verification processes, and have transparent reporting systems. They require regular monitoring, detailed documentation, and public reporting, ensuring that credits represent real, measurable, additional, and permanent climate benefits. Lower-quality credits risk overstating benefits or being vulnerable to reversal, while high-quality credits are grounded in strict additionality, permanence, and third-party verified impacts.
Even though the best carbon credit standards have tighter verification and transparency to prevent past abuses, a lot of the actual outcome still depends on careful planning and designing an appropriate strategy for your case since each credit may take a different approach to achieve the emissions reduction or carbon sequestration goal.
Dots.eco’s approach to carbon credits
One of our highly sought-after services is based on carbon credits, our carbon offsets. A carbon offset is a certified reduction or removal of greenhouse gases used to compensate for emissions made elsewhere. Offsetting is usually done by buying carbon credits equal to the amount of emissions you would like to offset and then retiring them. This means that we finance the sequestration/emission reduction of 1 tonne of carbon when we purchase a carbon credit, and then remove it from the carbon market so it can’t be sold or used again by retiring it, thus officially applying its climate benefits to offset emissions.
To ensure the selection of effective, high-quality credits, we prioritize credits certified by reputable standards such as Verra’s VCS, Gold Standard, or the American Carbon Registry. These are known for strict methodologies, requiring additionality assessment (i.e., checking if the carbon reductions would indeed NOT happen without carbon credit financing) and third-party verification. But we don’t stop there! After narrowing down credits to only the most reputable certifications, we look for projects that deliver real co-benefits for ecosystems and communities, have high permanence, use conservative baselines, have strong safeguards against leakage and reversals, and publish transparent, third-party verified monitoring reports. The idea is to ensure that the credits we engage with truly contribute to meaningful climate action.
If you’re looking to make a meaningful impact with your carbon offsets and ensure you’re supporting high-quality projects, feel free to book a demo with our team or if you’re an individual looking to offset your carbon footprint, you can subscribe to our monthly impact-making club, Flow. Our platform simplifies the process of selecting and managing the most effective carbon credits, empowering you to take immediate action toward a sustainable future and casually save the planet.
