Voluntary carbon credits: how to spot a credible project and avoid greenwashing

A market under scrutiny

In January 2023, an investigation by several international media outlets questioned the reality of the emission reductions claimed by a large share of credits from avoided deforestation projects certified by the market's leading standard. Other analyses followed, targeting improved cookstove projects and renewable energy projects in countries where they were already profitable.

The voluntary carbon market has been lastingly transformed: volumes have fallen, the price gap between low- and high-quality credits has widened, and buyers have become far more demanding. For a company, buying carbon credits is no longer a harmless communications gesture: it is a decision that puts its credibility on the line.

Voluntary is not compliance

The first source of confusion: voluntary carbon credits have nothing to do with EU Emissions Trading System (EU ETS) allowances. These allowances are a regulatory obligation for industrial and energy installations, aviation and maritime transport; a second system (ETS2) is due to apply to fuels used in buildings and road transport in the coming years.

A voluntary credit can in no way be used to meet an EU ETS obligation. It finances an emission reduction or removal project outside the company's own boundaries, on a voluntary basis. Mixing the two notions in a sales pitch or a sustainability report is a mistake — and a risk.

Three main types of credits

Avoidance. The project prevents emissions that would otherwise have occurred: protecting a threatened forest, replacing a fossil fuel. This is the category most exposed to criticism, as the baseline scenario is hard to establish.

Reduction. The project cuts existing emissions: methane capture, energy efficiency, changes in farming practices.

Removal. The project takes CO₂ out of the atmosphere and stores it: afforestation, soil restoration, hedgerows, biochar, or technological direct air capture. These credits are scarcer and more expensive, but increasingly sought after for residual emissions.

The criteria of a high-quality credit

Additionality. The project would not have happened without carbon finance. An already profitable solar farm or a forest that was never under threat is not additional.

A conservative baseline. Reductions are calculated against what would have happened without the project. An overly pessimistic scenario artificially inflates the number of credits.

Permanence. Stored carbon must stay stored over the long term. Forestry projects must hold a buffer of credits to cover risks such as fire, storms or dieback.

No double counting. A given tonne may only be claimed once — neither by two buyers, nor by both the buyer and the host country in its climate commitments.

Independent verification and full traceability. Each credit must be verified by a third party, recorded in a public registry and "retired" in the buyer's name when used.

Social and environmental safeguards. Respect for the rights of local communities, no negative impact on biodiversity, and ideally documented co-benefits.

Labels and standards: useful, but not enough

Label Bas Carbone. Created in 2018 by the French Ministry for the Ecological Transition, it certifies projects located in France: forestry, agriculture, hedgerows, soils. It offers strong traceability and local roots that buyers value, for more limited volumes.

International standards. Verra (VCS), Gold Standard or Puro.earth for durable removals certify most global volumes, with varying levels of rigour depending on the methodology.

Integrity initiatives. The Integrity Council for the Voluntary Carbon Market (ICVCM) awards a "Core Carbon Principles" label to programmes and methodologies deemed robust. The Voluntary Carbon Markets Integrity Initiative (VCMI) sets rules for corporate claims. At EU level, a certification framework for carbon removals (the CRCF Regulation, adopted in 2024) is being rolled out.

A label is a starting point, not a guarantee: within the same standard, quality varies widely from one methodology and project to another. Project-by-project analysis remains essential.

What you are allowed to say

In France, since 2023, a company claiming that a product or service is "carbon neutral" must publish its emissions assessment, its reduction pathway and how residual emissions are offset.

The EU "EmpCo" directive, due to apply from 27 September 2026, goes further: it bans claims that a product has a neutral, reduced or positive climate impact when they are based on offsetting emissions. Statements such as "carbon-neutral product thanks to offsetting" are therefore no longer permitted in commercial communications.

The framing that prevails is contribution: the company first reduces its own emissions, then finances high-quality projects that contribute to the global climate effort, without claiming to cancel out its footprint.

Where credits fit in a climate strategy

After reduction, never instead of it. Credits do not count towards SBTi targets and do not exempt from any regulatory obligation. They come in once the reduction pathway is under way.

For residual emissions or as a contribution. By 2050, only emissions that cannot be eliminated are meant to be neutralised through durable removals. Until then, credits are used to contribute to additional projects beyond one's own value chain.

With a clear purchasing strategy. A diversified portfolio, a growing share of removals, a preference for projects close to your activities or regions, multi-year contracts to secure volumes and prices: buying credits should be managed like any other strategic purchase.

Our approach

The voluntary market is fragmented and opaque for non-specialist buyers. As an aggregator, our role is to source projects, assess them against these criteria, reject those that do not hold up, and then connect buyers and project developers in a transparent relationship — without proprietary trading.

Let's discuss your carbon strategy: Kilowater helps you select credible projects and make compliant claims.