What a carbon credit represents
A carbon offset is a claim that a project has reduced or removed greenhouse gases somewhere else to compensate for emissions made by the buyer. A credit generally represents one metric ton of carbon dioxide equivalent—the warming effect of carbon dioxide and other greenhouse gases expressed in a common unit. Projects may protect forests, restore wetlands, or capture methane that would otherwise escape.
This accounting allows a company to include credits in a climate claim without changing every source of its own emissions. It can be useful for emissions that are difficult to eliminate quickly, but it is not the same as preventing those emissions in the first place.
The counterfactual behind the credit
To issue a credit, a project must estimate what would have happened without it. That imagined alternative is called the baseline. A forest project, for example, can claim a climate benefit only if its protection keeps carbon stored that would otherwise have been released. The difference between the project and the baseline is what the credit is meant to count.
That comparison creates a difficult test: was the climate benefit genuinely caused by the project, and is it being counted only once? Reviewers also have to consider whether the benefit lasts. A forest can burn or be cut later, releasing stored carbon; an activity that reduces emissions in one place may also shift them elsewhere.
Why the accounting matters
Credits direct money toward projects that might struggle to attract funding otherwise. But their value depends on the credibility of the underlying estimate, not simply on the number of credits purchased. If a buyer treats uncertain or temporary benefits as a full substitute for its own emissions, the neutrality claim can look stronger than the climate result.
That is why the practical distinction matters: offsets can finance climate action, but they do not make an engine emit less.
