Carbon credits (part of carbon offset) represent a unit of emissions that the project will prevent discharge or will remove from the atmosphere. Strictly speaking, it is a tradable permit to reduce 1 tonne of CO₂ equivalent. Carbon credits are generated through specific projects – such as planting forests, renewable sources or technological solutions – and are then sold to those who want to “offset” their emissions. This means that a company that still emits some emissions can buy credits from projects that reduce them elsewhere and formally claim to have offset its carbon footprint.

• Voluntary vs. regulated market: Carbon credits are divided into mandatory ("compliance") and voluntaryMandatory allowances are part of regulated systems – such as the European Emissions Trading System (EU ETS) – where states or unions set a total emission quota and companies must either buy an allowance or receive one from the state for each ton of CO₂ they emit. Voluntary market (VCM) is outside of mandatory obligations; it is where companies, organizations or individuals buy credits beyond the legal requirements. However, both forms work similarly – if a project reduces emissions, it produces credits that can be used (retired) to offset emissions elsewhere.
• Types of solutions – natural vs. technological: Projects emitting credits can be divided according to how they reduce or eliminate emissions. Among natural solutions (NBS) These include reforestation, wetland or soil restoration, and protection of existing forests that sequester carbon through tree growth. Technological solutions they can include the installation of renewable energy sources (wind or solar farms replacing fossil fuels), the capture and storage of CO₂ from production processes (CCS), or the destruction of methane and other potent greenhouse gases. In practice, carbon credits therefore consist of a mix of different projects – from solar power plants to new forest plantations – with each credit usually representing the reduction or removal of exactly one tonne of CO₂ equivalent.

Illustration: A wind farm in Spain (May 2025). Renewable energy projects are among the main sources of carbon credits. Any project that increases green energy production or protects nature can emit credits, which companies then buy on compensation own emissions.

European countries have set an extremely strict emissions reduction target by 2040 – around 90 % compared to 1990 levelsThese ambitions were to result from the expert recommendations of the so-called European Scientific Advisory Board on Climate Change (ESABCC) and from of the Fit for 55 package, which sets out the EU's overall path towards carbon neutrality. However, the ESABCC has recently recommended not to use international credits (according to Paris Agreement Article 6) in meeting the 2040 target. Specifically, they warned that using foreign projects to meet the target could “undermine domestic value creation” and divert investment needed to a real green transition in the EUThe original proposal to the Commission (from July 2025) considers a concession – for example, allowing the import of credits to maintain the 90% reduction – but experts advise sticking to the target. without such concessions. Experts emphasize that without this time a tough domestic reduction, the target would fall out of reach and the EU would abandon the principle of its own ambitions. ESABCC, however, continues to support the goal of reducing emissions by 90–95 % by 2040, which would mean virtually "landless" energy and complete electrification of industry by mid-century.

Criticism of carbon offsets and the risk of greenwashing

Experts and environmental organizations have long warned that carbon offsets are not a substitute for real emission reductionsIn many cases, projects issuing credits have been shown to fall short of their intended results. CarbonBrief’s analysis found that companies often successfully offset a significant portion of their emissions through the purchase of credits – but many of these projects “they appear to be failing to actually reduce emissions". No independent study has yet confirmed that most offsets would deliver new permanent CO₂ savings: one study calculated that only approx. 12 % of offsets sold are generated by real emission reductionsIn addition, experts point out uneven and poor quality credits – it seems that tens of millions of tons of CO₂ sold are actually “they are probably crap credit", meaning the projects did not create them in accordance with the declared goals.

These shortcomings lead to accusations of greenwashing – companies inflate emissions reduction figures using credits, even though their own CO₂ production remains high. Activists say offsets often act as “pollution license": instead of real investments in cleaner technologies, the biggest polluters prefer to buy cheap offsets. For example, CarbonBrief pointed out that two-thirds of companies with the ambition to achieve zero emissions use offsets to achieve their goals, but large projects - there are talks of tens of millions of tons of credits for oil companies or car manufacturers - in practice they often failThe reliability of credits is also complicated by a lack of transparency: for many purchases, there is no public data on how and where the invested projects actually save carbon.

The key concerns regarding offsets are summarized in the following points:

• Insufficient additionality: Many projects could have been implemented without them (e.g. state subsidies for wind farms), so the credits do not increase to a real reduction, but rather to a dense they rewrite the accounts.
• Poor quality credits: This is evident from cases such as reforestation projects that claimed to plant hundreds of thousands of trees to absorb carbon, but later found that most of the trees had died. Analyses of large corporations have shown that tens of percent of their offsets are probably worthless ("junk").
• Greenwashing: In the absence of a standardized definition of “quality,” companies often stubbornly present their credit offsets as proof of carbon neutrality, even though actual emissions are only stagnating. Critics therefore view offsets as cheap trick instead of proper climate action.

As a result of these weaknesses, offsets have been viewed by assessors of emissions targets as effective “support measures, not primary solutions.” For example, the Science-Based Targets Initiative (SBTi), which audits corporate climate plans, recently concluded that “carbon credits are largely ineffective at reducing emissions,” and therefore currently allows companies to use them. until after meeting its own emission targets through direct reduction.

Impact on businesses and climate pledges

The introduction of stricter rules and restrictions on offsets could significantly affect companies that have so far relied on credits to meet climate goals. In the CarbonBrief ranking, companies such as Shell, Volkswagen and Chevron are the largest buyers of offsets (tens of millions of tons). Since many large companies (e.g. car manufacturers, airlines and energy companies) have set ambitious “zero emissions” goals, they often assumed that they would achieve part of their goals by buying offsets. By limiting this option, they risk having to reassess their commitments. Reuters warns that “stopping the use of carbon offsets increases the prospect that some companies will cancel or reduce their carbon footprint reduction targets”. Several corporations have already begun to distance themselves from offsets – according to an analysis by The Guardian, “some of these companies have already stopped using carbon offsets as growing evidence shows that carbon trading is not leading to the announced emission reductions”.

This means that if the EU moves to limit offsets, companies will be forced to look elsewhere. They will have to invest directly in clean technologies and energy efficiency, or accept that meeting the targets will be more difficult. Some may reduce their declared climate ambitions; others may focus on their own emission reduction projects. In either case, they risk the method of "let's buy offsets and double CO₂ production" will no longer be enough.

The future of "quality" carbon credits in EU policy

The strict stance of the ESABCC does not mean a complete ban on all credits, however. Experts are now discussing what role the best (verified, “quality”) offsets could play in EU climate policy. For example, European institutions are developing certification schemes that will ensure that only credits from projects with proven benefits are accepted. The international Paris Mechanism (Article 6) was designed to tighten the rules on offsets – specifically Paris Agreement Crediting Mechanism (PACM)which has improve quality and integrity carbon credits. Similarly, ERCST experts propose that technical criteria be adopted in European legislation that would allow only international credits from projects with “robust climate, social and environmental benefits” to be used. The aim is to prevent the import of cheap, low-quality offsets and protect the credibility of the EU emissions market.

As a result, strict rules should apply: offset credits may remain part of the system, but solely as a supplementary tool for the final "cleaning up" of emissions that cannot be completely eliminated otherwise (e.g. certain industrial processes or essential air transport). Their use should be linked to transparent verification of outputs - projects that are extra strictly certified (e.g. according to the new CRCF or PACM method). However, the main emphasis remains on drastic reduction of emissions directly in the EU, with offsets only as a secondary aid after meeting their own goals. As experts summarized, investments in domestic clean technologies bring “fewer health problems and greater safety” compared to relief efforts abroad.

In summary, future policy should promote strict domestic cuts, and only "quality" carbon credits – with proven additionality and monitoring – should be used to finance additional climate change mitigation projects. After the mass introduction of raw offsets in the past, scientists and companies are now warning more and more loudly: emissions trading didn't let us get closer to the goals; the real transformation comes only when we start emissions real reduce.

Sources: The facts and quotes given are based on analyses by the European Scientific Advisory Board on Climate Change (ESABCC), Reuters and CarbonPulse reporting on the new EU 2040 target, expert studies and reports (CarbonBrief, Guardian, Deloitte, CSR initiatives) and Slovak climate literature (CO2news). These sources agree that offsets can only alleviate the crisis to a certain extent, and therefore the EU should use the new credits solely as a complementary instrument under strict conditions. Spring