Tackling climate change involves measures such as direct reductions in greenhouse gas emissions and the use of financial instruments that facilitate the transition to climate neutrality. These include carbon credits.

Carbon credits are useful instruments in that they allow a carbon debt to be transferred to projects that have generated realisable and certified reductions. Their validity is based on stringent regulations (EU ETS), external audits and recognised methodologies, so they become relevant in climate neutrality strategies, complementing companies' direct reductions.

Definition in EU law and policy

Carbon credits is a general term used mainly for

• Voluntary Carbon Market (VCM) - voluntary market where companies buy credits to offset emissions (e.g. reforestation projects in Africa, methane capture in Asia).
• Compliance markets (such as EU ETS) - where they exist carbon credits in the form of regulated licences.

Under the EU Emissions Trading System (EU ETS), each type certification allowance gives the right to emit one tonne of CO₂ equivalent and is a valid carbon credit for compliance or for trading on voluntary markets. This regulation is based on the EU ETS Directive (2003/87/EC), further consolidated for the phases after 2021. Directive 2003/87/EC (EU ETS Directive) lays down the EU Emissions Trading Scheme (EU ETS Directive) (https://eur-lex.europa.eu/legal-content/RO/TXT/?uri=CELEX%3A02003L0087-20240101Article 3(a) defines allowance (the certificate that gives the right to emit one tonne of CO₂e) as the basic tradable unit - what, in carbon markets terminology, is referred to as a carbon credit. In EU legislation, the term allowance is used officially, but in general market parlance and international standards it is equivalent to carbon credit.

Examples of good practice in the European Union

Royal Schiphol Group, the company that owns Schiphol Airport in Amsterdam, has purchased Gold Standard and Verra Verified Carbon Standard (VCS) certified carbon credits to offset Scope 1 and Scope 2 emissions as part of its strategy to achieve climate neutrality by 2030, targeting reforestation and renewable energy projects in EU and African countries. In the report EU Aviation Environmental Report 2022, developed by EASA, EEA and EUROCONTROL, the Schiphol model was presented as an example of best practice in integrating certifiable offsets into a climate strategy that emphasises direct emission reductions and electrification of airport infrastructure.

Another significant example is Deutsche Bahn, Germany's leading rail transport provider. In partnership with its energy sources, the company has purchased verified carbon credits to offset emissions that it cannot cover by using only green energy. Deutsche Bahn has invested in Gold Standard-certified reforestation and rainforest protection projects as well as biomass projects in Asia. The strategy aligns with the goal of climate neutrality by 2040 and has been cited in the Sustainable and Smart Mobility Strategy (European Commission, 2021) as an example of progressive decarbonisation by combining carbon credits with green infrastructure development.