Emission Reduction Projects: Carbon credits are typically generated by projects that reduce, remove, or avoid the emission of greenhouse gases. These projects can include renewable energy installations (such as wind, solar, or hydroelectric power), reforestation efforts, energy efficiency improvements, methane capture from landfills, and more. Each ton of CO2 equivalent that these projects prevent from being released into the atmosphere earns them one carbon credit.

Verification and Certification: To ensure the legitimacy and environmental impact of the emission reduction, these projects undergo rigorous verification and certification processes by independent third-party organizations. This certification guarantees that each carbon credit represents a real, quantifiable, and additional reduction in greenhouse gases.

Trading and Offsetting: Once issued, carbon credits can be traded in voluntary or compliance markets. Businesses, governments, or individuals can purchase these credits to offset their own emissions, effectively "neutralizing" their carbon footprint by funding equivalent emission reductions elsewhere.