The money paid for a carbon offset does not necessarily go to one organisation. How it is distributed depends on the carbon project and how the credit is purchased.
Some credits are bought directly from a project developer or landowner, while others are sold through carbon brokers, traders, retailers or other intermediaries. Project developers use the revenue to help fund activities such as woodland creation, peatland restoration, carbon removal technology or other eligible emissions reduction projects.
There can also be costs associated with developing, monitoring and verifying the project and registering or issuing the credits. For example, the UK’s Woodland Carbon Code charges fees for issuing Pending Issuance Units and converting them into verified Woodland Carbon Units, while project developers may also incur validation, verification and ongoing land-management costs.
The proportion of the purchase price that ultimately reaches the underlying project therefore differ between schemes.
A business purchasing carbon credits should understand who developed the project, which standard and registry are being used, whether intermediaries are involved and what evidence is available to show how the project is financed and managed.
