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Carbon credits are not the only solution needed: effective, long-term decarbonisation requires avoiding and reducing emissions. But compensating emissions with carbon credits can play a valuable additional role. Not all technologies and energy services can be swapped out for non-emitting alternatives at the necessary pace. In some sectors, practical alternatives have yet to be developed. For example, in aviation, there are currently no large zero-emission passenger planes in commercial use. Carbon credits enable the industry to compensate for emissions right now, while lower-carbon planes and fuels are developed at scale.

A carbon credit represents the removal or avoidance of one metric tonne CO鈧� emissions. This can be achieved using different methodologies. Some projects remove CO₂ from the atmosphere, for example, by planting new forests or by using technology such as direct air capture. Other projects avoid emissions, for example by preventing deforestation, or providing fuel-efficient cookstoves which replace coal- or wood-fired stoves. Each tonne of CO₂ removed or avoided by a project generates one credit, which is sold to fund the project as it continues to reduce emissions.

Every credit generated by a project carries a unique serial number which is recorded in a publicly accessible and independently operated registry. As a result, every credit can be tracked from its origin to the end user.