RETIREMENT

Retirement refers to the process of permanently removing a carbon credit from circulation to ensure it is not resold or reused. Once a carbon credit is retired, it cannot be traded again, thus guaranteeing that the carbon credit it represents is claimed only once. This practice ensures the credibility of carbon credits, confirming that the claimed emissions reductions have been achieved and cannot be counted multiple times.  

Retirement is crucial for maintaining the integrity of the carbon credit markets. It ensures that each carbon credit, representing a specific amount of reduced or sequestered greenhouse gas emissions, is accounted for correctly and only once. Without retirement, there would be a risk of double counting, where the same credit is sold or claimed multiple times, undermining the trust and effectiveness of carbon credits. Proper retirement practices enhance transparency and trust in the carbon markets, encouraging more entities to participate and invest in climate action.  

Carbon credits are retired through a formal process managed by carbon credit registries. These registries track the issuance, ownership, and retirement of carbon credits. When an entity decides to retire a credit, they must inform the registry, which then marks the credit as retired in their database, ensuring it cannot be traded again.