Selling Carbon Credits: How Does It Work? Take The First Step

Samson Opanda is an environmental engineer overseeing numerous sustainability projects in Kenya.Written by Samson Opanda

Carbon Offsets Credits | November 9, 2022

An image of a tree seed on a man's palm, with 8 Billion Trees watermark.

The carbon marketplace has grown tremendously since its inception after the Kyoto Protocol, a United Nations treaty that commits the participating countries to reducing greenhouse gas emissions.

While many are familiar with the demand side of the market, very few people pay attention to the supply side, with selling carbon credits. Yet, both the demand and supply sides must work for the carbon market to deliver its emission reduction targets.

That’s why it’s time to focus on the supply side of the carbon marketplace, to fill this information gap.

Generally, sellers of carbon offsets have three options to consider:

  • Direct sales to clients
  • Marketing to offsetting companies
  • Selling to brokers

Before diving into each one of them, let’s review the process of creating a carbon offset that truly helps the environment…

Creating a Carbon Credit or Offset

Before selling carbon credits, one ought to understand the process of creating these offsets in the first place. In simple terms, offsets offer a means of reducing historical emissions or avoiding future emissions.

By selling an offset, one is essentially requesting for finance to invest in an emission reduction activity. Thus, creating an offset starts by coming up with an emission reduction or avoidance activity.

Once the project proponent — also referred to as the Designated Operational Entity (DOE) in the case of a corporation — is confident that the project indeed offsets emissions, the next step is to follow the Clean Development Mechanism (CDM) procedures to validate the project. 2

Here, the CDM Executive Board reviews each project to confirm its emission reduction claims. With approval, one can proceed to sell the project as an offset.

Selling A Carbon Credit

While the process of creating offsets is complex, selling them is much simpler. There are three main ways to sell a carbon credit, depending on what you want to do with it and who you’d prefer to sell to.

Direct Sales

The first option for selling a carbon offset project is to contact emitters who want to buy the offsets directly. 1

Here, project proponents or the Designated Operational Entity will have to search for prospective buyers independently. For instance, DOEs can pitch their project to a specific company to sell it to them.

This practice is common for complex offsets such as methane reduction projects. Creating such projects is quite a task, and only a few companies may be interested. Selling the offset will entail reaching out to such companies and selling them your methane reduction offset.

Selling To Offsetting Companies

A second option of selling carbon project offsets is contacting companies specializing in generating and selling offsets. Such companies have their projects which they sell in the carbon marketplace.

They, however, would probably be interested in additional offsets from outsiders to diversify their portfolios. Taking this route requires establishing some form of cooperation between carbon offsetting companies and project proponents. Such collaboration is essential considering that, in some cases, carbon offsetting companies finance third parties to conceive and implement projects on their behalf, an opportunity you can exploit.

Selling To Brokers

A third option is to seek out brokers in the carbon trading market. Just like the stock market, carbon markets have brokers who can receive a quote from a buyer and find a corresponding offset in the market.

Contacting these brokers will open the carbon market to project proponents who may have little experience with carbon trading. The traders will list the offset and find appropriate buyers on your behalf, but there’s a catch.

In many cases, the brokers charge fees that may not be friendly to some. Another downside of this option is that the project proponent loses the chance to understand the working mechanism of the carbon market. For instance, such a seller may not know whether the broker will sell the offset as a voluntary or a non-voluntary instrument.

The following sections will look at the carbon marketplace in greater detail, to ensure sellers understand some of these terms used in the carbon market before selling their offsets.

The Carbon Marketplace

The Kyoto protocol, under article 17, provided the framework for setting up the current carbon trading marketplace. The market allows emitters to pay third parties to engage in emission reduction activities on their behalf in any part of the world. Since its inception back in 2002, the market has grown into a billion-dollar industry in the name of saving the planet.

A close up shot of tree saplings with red and green leaves in a nursery in Brazil, with 8 Billion Trees Watermark.

The World Bank publishes yearly reports of the state of the carbon market. This year, the report noted the following developments:3

  • The carbon trading market has since grown from having only 9 tradable instruments in 2002 to 64 instruments in 2021.
  • In February this year, China set up a new carbon marketplace that is likely to become the largest Emission Trading Scheme in the world.
  • As of 2021, the carbon instruments in the market covered 21.5 percent of total global emissions.

These statistics present a lucrative global carbon market that is growing by the day. Currently, the market covers 21.5 percent of global emissions, a rise of about 15 percent from the 5 percent coverage enjoyed in 2002.3

Governments all over the world are supporting initiatives to grow the market. China is currently leading the growth, with its new carbon marketplace that is likely to serve the Asia market quite well.

Voluntary vs. Non-Voluntary Offsets

Many people liken the workings of the carbon marketplace to the stock market, where traded shares are viewed as offsets while the stock market is considered the equivalent of the modern carbon market.

While this example provides a simple way of understanding the carbon market, its inner workings are much more complex… but easy to understand with a bit of context from history.

Non-Voluntary and Compliance Offsets

Discussions around creating a carbon marketplace for global emitters began in the 1980s. At that time, large multinational companies were the major emitters.2 They were also the ones most committed to offsetting their emissions.

As a result, the first version of the carbon marketplace targeted these companies. To ensure that the companies took climate change seriously and engaged in offsetting activities, governments mandated the companies to buy carbon trading instruments in the carbon market.

The mandates were backed by law, leading to the term “compliance offsets.” Also termed non-voluntary offsets, specific companies were required to procure these offsets as part of regulatory compliance.

Voluntary Offsets

With time, it emerged that more companies and even individuals were keen on offsetting their emissions.

The carbon marketplace at the time did not accommodate this new group of people as it focused primarily on large corporations mandated by law to buy carbon credits. Voluntary carbon markets emerged to address this problem. Unlike compliance/non-voluntary offsets, these new credits allowed companies and people to procure offsets but not necessarily for regulatory compliance.

Voluntary Offsets That Can Be Used as Compliance Offsets

An interesting development emerged as voluntary offsets started gaining traction. More companies, even those procuring compliance offsets, started considering buying non-voluntary offsets as an addition to their regulations-mandated reduction activities.

Such developments saw the voluntary carbon market actively interact with the compliance market for the greater good of emission reduction. To take advantage of this development, states like California developed voluntary offsets that companies could use as compliance offsets. 2

While the distinction between voluntary and non-voluntary offsets centers on regulatory compliance; nevertheless, both options are viable offsetting opportunities for buyers in the carbon trading market.

Selling Carbon Credits to Help Heal the World

The carbon marketplace is one of the go-to places for people keen on reducing their emissions. The demand side of the market has been vibrant over the years as the reality of climate change sunk across the globe.

Unfortunately, few people pay attention to the market’s supply side, an information gap that remains important to address. Suppliers in the carbon trading market should begin by designing projects that the Executive Board of CDM can approve.

After that, the suppliers can begin selling carbon credits directly to buyers, offsetting companies, or brokers in the carbon market. With the informed trading of carbon credits, there is the potential to greatly aid the earth.

Not only is this an opportunity for traders to make some money, but it is an opportunity to cleanse our atmosphere of harmful greenhouse gases, slow global warming, restore ecosystems, and rehabilitate wildlife.


1Carl, Zulauf. (2021). What Questions Should Farmers Ask about Selling Carbon Credits? Retrieved August 24, 2021, from

2Stockholm Environment Institute. (2020). “Carbon offset Guide.” Retrievd August 21, 2021, from

3The World Bank. (2020). “Emissions Gap Report 2020.” Retrieved August 22, 2021, from