Carbon Credits: What They Are, How They Work, And How To Buy Or Sell Carbon Credits

Carbon Credits: What Are They?

Carbon credits are tradable certificates that represent the reduction or offsetting of CO₂ emissions. They were introduced as part of international strategies aimed at combating climate change and promoting the reduction of greenhouse gas emissions.

Each carbon credit generally corresponds to one metric ton of carbon dioxide that has been avoided or removed through sustainable projects.

In recent years, the carbon credits market has grown significantly, driven by ESG policies, Net Zero targets, and increasing attention to environmental sustainability.

Through the use of carbon credits, companies are able to support sustainable projects while offsetting and reducing their environmental impact.

Carbon credits are generated by projects such as reforestation, renewable energy, and energy efficiency initiatives.

How do Carbon Credits Work

The functioning of carbon credits is relatively straightforward: entities that generate CO₂ emissions can offset them by financing climate projects capable of reducing, avoiding, or removing CO₂ from the atmosphere. This takes place within the Voluntary Carbon Market (VCM), the marketplace where carbon credits are traded.

Eligible projects include reforestation initiatives, renewable energy facilities such as solar and wind power plants, as well as carbon capture and storage technologies.

Carbon credits may be traded on both regulated and voluntary markets. Once used to offset emissions, they are retired through dedicated public registries, ensuring transparency and preventing the reuse of the same credit.

Who Issues Carbon Credits

Projects developed within the Voluntary Carbon Market are verified and certified by independent third-party international organizations, including Verra, Gold Standard, and Nori. These organizations assess the quantity of emissions effectively reduced or removed and issue the corresponding carbon credits.

In order for a project to generate carbon credits that can be purchased on the voluntary carbon market, several requirements must be met:

• Certified carbon credits must be real, meaning they must originate from environmental offset projects that produce a genuine climate benefit through the actual reduction or removal of CO₂ emissions.
• Emission reductions must be measurable and verifiable through the application of scientific methodologies and standards.
• Carbon credits must be unique: each credit must correspond to a single metric ton of CO₂ equivalent. A single credit cannot be counted more than once within the same project.
• Another essential requirement is permanence. Projects must ensure that the CO₂ absorbed or offset is not subsequently released back into the atmosphere, thereby guaranteeing a stable and long-lasting environmental benefit.
• Finally, a project must satisfy the principle of additionality. In other words, it must demonstrate that the sustainable project would not be economically viable without the financing generated through the sale of carbon credits.

Only projects that satisfy all of these requirements can obtain valid carbon credit certification and generate certified carbon credits for sale or purchase by companies and investors seeking to offset CO₂ emissions.

How to Buy Carbon Credits

Purchasing carbon credits requires several steps, including:

• Assessment of emissions to be offset: companies must determine how many tons of CO₂ they intend to offset through the purchase of carbon credits;
• Selection of an environmental project;
• Verification of the carbon credit certification;
• Purchase of carbon credits: once the transaction is completed, the carbon credits are registered and transferred to the buyer through official and traceable registries.

How to Sell Carbon Credits

The sale of certified carbon credits is reserved for entities that develop or finance projects capable of reducing, avoiding, or absorbing greenhouse gas emissions.

The main participants in the carbon credits market include:

• Agricultural companies;
• Forestry enterprises;
• Energy companies;
• Green startups;
• Non-governmental organizations (NGOs);
• Public and private entities.

To sell carbon credits, it is necessary to:

• Develop a project that complies with international certification standards;
• Monitor and document the environmental results achieved;
• Submit the project to independent verification;
• Obtain carbon credit certification;
• Register the credits with official registries;
• Market the carbon credits through brokers, ESG platforms, or direct agreements with purchasing companies.

Carbon Credits Legal Assistance – Arnone & Sicomo

Arnone & Sicomo Law Firm assists companies, investors, and intermediaries as a law firm and legal advisor specialized in carbon credits, ESG markets, and environmental sustainability. We provide strategic legal advice in the field of carbon trading and international green transactions.

Our team offers legal assistance and advisory services in:

• Purchase and sale of certified carbon credits (VERs and CERs);
• International contracts and carbon credits NDAs;
• Due diligence and verification of carbon credit ownership;
• Review of ESG certifications and compliance of environmental projects;
• Regulatory compliance in relation to carbon credits and sustainability;
• Cross-border transactions and international negotiations;
• Legal assistance for the Voluntary Carbon Market (VCM);
• Management of legal and reputational risks in ESG transactions (including greenwashing risk).

We support our clients in structuring secure, transparent, and legally compliant transactions, providing specialized guidance in CO₂ emissions offsetting and ecological transition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.