Carbon credits, also known as carbon offsets, are often considered a central economic tool in the global strategy for decarbonization. Several corporations and industries, including airlines, are trying to fight climate change by funding projects that promise to reduce greenhouse gas emissions elsewhere, but lately, questions are emerging about whether they deliver the climate outcomes they promise.

How carbon credits work

According to a guideline from the International Air Transport Association (IATA), carbon offsetting is an action taken by companies to compensate for, in this case, carbon emissions from their use of commercial aviation services. The offset can be equivalent, in part or in whole, to the associated emissions by financing a reduction in emissions elsewhere, which, as noted by IATA, can bring social, environmental, or economic benefits relevant to sustainable development.

​Furthermore, carbon markets (voluntary or regulated platforms where carbon credits are bought and sold) have been steady over the last few years. According to MSCI, “the value of the primary carbon-credit market remained broadly unchanged in 2025 at around USD 1.4 billion”, but it is showing some strengthening signals in the future. MSCI forecasts that by 2030, the global carbon-credit market could be worth between USD 5 and 20 billion.

This market growth shows companies’ intent to meet their global commitments to mitigate climate change. Major airlines, including United Airlines, Lufthansa Group, and Air France–KLM, use carbon credits to meet voluntary climate pledges or comply with international strategies such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), as it allows them to meet climate commitments at a lower marginal cost per tonne of CO₂, according to a PWC article.

For example, just recently, in mid January, Microsoft signed an agreement to purchase 100,000 tons of biochar-based carbon removal credits (CDRs) from the Indian developer Varaha over the next three years. (Read about it on our site)

But are carbon credits actually achieving real emission reductions?

However, many questions and concerns have arisen about the integrity of the global market and its promise to reduce CO₂ emissions.

A 2025 study by Dr Joseph Romm, a senior researcher at the Penn Center for Science, Sustainability and the Media, and colleagues estimates that, across all the projects they investigated, less than 16% of the carbon credits issued to them represent real emission reductions. And if credits do not represent real or durable emissions reductions, as research by the United Nations Development Programme (UNDP) suggests, they limit broader economic benefits.

Moreover, there is little transparency within the industry. According to the same research, overestimations, unclear standards, and verification issues can make it difficult not only for observers but also for stakeholders to track how much of the money spent on credits actually reaches project sites or results in meaningful emission reductions.

In this case, due to the International Civil Aviation Organization’s (ICAO) CORSIA strategy, the aviation industry largely relies on reforestation-based carbon credits, which, according to Climate Action Tracker, cannot truly offset fossil fuel emissions because of their low permanence and supply limits. That can raise doubts about the effectiveness of carbon credits in delivering real climate outcomes for the industry.

In short, carbon credits serve as a tool for the aviation industry to support decarbonization strategies and aircraft; however, research shows that a small percentage of carbon credits actually result in real reductions in emissions, so for now, their role in effectively achieving net zero remains uncertain.