How are carbon credits and offsets created?

Credits and offsets form two slightly different markets, although the basic unit traded is the same – the equivalent of one ton of carbon emissions, also known as CO₂e.

It’s worth noting that a ton of CO₂ does refer to a literal measurement of weight. Just how much CO₂ is in a ton?

• The average American generates 16 tons of CO₂e a year through driving, shopping, using electricity and gas at home, and generally going through the motions of everyday life.

To further put that emission in perspective, you would generate one ton of CO₂e by driving your average 22 mpg car from New York to Las Vegas.

Carbon credits are issued by national or international governmental organizations. We’ve already mentioned the Kyoto and Paris agreements which created the first international carbon markets.