Some markets are regulated, such as those being established under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC). Others are unregulated, such as the voluntary carbon market, where companies and individuals buy carbon credits issued by various standards bodies.

On the supply side, climate projects issue carbon credits based on their estimated climate impact which are then sold, usually via intermediaries, on the carbon market. These projects include forestry projects, carbon capture and storage, wetland management, regenerative agriculture, renewable energy projects in countries that cannot afford them, and more.

On the demand side, buyers purchase carbon credits to use them for numerous purposes. Unfortunately, the most common use remains (supposedly) to compensate for or offset emissions. Offsetting is a highly problematic practice because it diverts the focus away from the real emissions reductions that must be urgently achieved, provides ample opportunity for greenwashing and usually does not represent the claimed climate impact.

We oppose the use of carbon credits to compensate for emissions. This means that sellers must not market their carbon credits as an offsetting tool. Purchasers of carbon credits must not use them to make dubious claims, such as ‘carbon neutral’ or ‘climate neutral’. Instead, buyers should clearly and transparently emphasise only that they contributed to climate action by providing a certain amount of funding to a certain type of project. This is known as the ‘contribution claim’ model.