Follow the Carbon: Carbon Credits — Accounting for Carbon Is Not the Same as Controlling Carbon

Follow the Carbon: Carbon Credits — Accounting for Carbon Is Not the Same as Controlling Carbon Carbon credits have become an important part of the global response to climate change. They can create a financial value for reducing, avoiding or removing greenhouse-gas emissions. They can also help direct capital toward projects that might otherwise struggle to attract investment. But there is a fundamental distinction that is sometimes lost in the discussion: A carbon credit is an accounting instrument. Carbon itself is a physical material. Understanding the difference requires us to follow the carbon. Consider a facility consuming natural gas. Carbon enters the system physically as hydrocarbons. Combustion converts that carbon primarily into CO₂. The CO₂ then crosses the plant boundary and enters the atmosphere unless it is captured. A carbon credit may change the facility’s reported or compensated emissions position. It does not, by itself, change that physical carbon pathway. That distinction does not make carbon credits meaningless. It simply tells us what they can—and cannot—do. Three different questions When evaluating any climate strategy, it is useful to separate three questions. Net zero asks: What is the balance between greenhouse-gas emissions and removals across a defined accounting boundary and period? Decarbonisation asks: How are we reducing the carbon intensity or greenhouse-gas emissions associated with an activity? Defossilisation asks: Are we reducing and ultimately ending the transfer of additional geological carbon into the active atmosphere–biosphere–ocean system? These questions overlap, but they are not identical. A company may improve its reported net emissions through high-quality credits while continuing to consume fossil carbon. It may decarbonise a process substantially without completely eliminating fossil feedstock. And a system may pursue defossilisation by changing where its carbon originates and how carbon physically circulates through the system. The terminology matters because each describes a different aspect of the problem. Follow the physical carbon first Before discussing credits, certificates or offsets, draw the system boundary. Then ask: Where does the carbon enter? Is it geological, biogenic, atmospheric or recycled? Where does it go? How much becomes product? How much is captured? How much is recycled? How much is permanently stored? And how much ultimately reaches the atmosphere? Those are physical questions. They require mass balances, measurement and clearly defined boundaries. Only after establishing that physical carbon inventory should we apply the accounting framework. This is particularly important because one tonne of CO₂ represented in an accounting system and one tonne of CO₂ physically moving through an industrial process are related concepts—but they are not the same thing. Measurement strengthens carbon accounting For industrial systems, the strongest carbon accounting begins with physical measurement wherever practical. Gas flow can be measured. Gas composition can be measured. Carbon entering and leaving a process can therefore be calculated from actual operating data. For example, where natural gas, hydrogen-rich synthetic gas or recycled gas streams are involved, composition matters. Methane, carbon monoxide, carbon dioxide and hydrogen contribute differently to the carbon and energy balances. This is why instrumentation such as flow measurement and gas chromatography can become important not only for process control, but also for carbon accounting. The objective should increasingly be: Follow the carbon physically, reconcile the mass balance, and then apply the accounting rules. Carbon credits still have a role High-integrity carbon credits can support activities such as verified carbon removal, methane abatement, ecosystem restoration and other genuine emissions-reduction projects. But their role should be clearly understood. They are mechanisms for assigning economic and accounting value to defined climate outcomes. They should not become a substitute for understanding the physical system producing the emissions in the first place. For industrial decarbonisation, the hierarchy therefore matters: Measure the physical flows. Reduce avoidable emissions. Change the underlying carbon pathway where technically and economically possible. Use credible accounting mechanisms for what remains. The climate challenge ultimately exists in the physical world, not in the ledger. Carbon accounting is essential for measuring responsibility and progress. But if we want to understand whether an energy system is genuinely changing, there is an even simpler question to begin with: Where did the carbon come from, where did it go, and will we need to extract more geological carbon to run the system again? Follow the carbon, and the distinction becomes much clearer. #FollowTheCarbon #CarbonCredits #CarbonAccounting #NetZero #Decarbonisation #Defossilisation #EnergyTransition #CarbonManagement