Carbon Credit Calculator Formula
Understand the math behind the carbon credit calculator. Each variable explained with a worked example.
Formulas Used
Net Revenue
net_revenue = gross_value - broker_fee - verification_costGross Value
gross_out = gross_valueTotal Costs
total_costs = broker_fee + verification_costNet per Credit
net_per_credit = (gross_value - broker_fee - verification_cost) / credits_tonsVariables
| Variable | Description | Default |
|---|---|---|
credits_tons | Carbon Credits Generated(metric tons CO2e) | 500 |
price_per_credit | Price per Credit(USD) | 30 |
verification_cost | Verification Cost(USD) | 5000 |
broker_pct | Broker Commission(%) | 10 |
gross_value | Derived value= credits_tons * price_per_credit | calculated |
broker_fee | Derived value= gross_value * broker_pct / 100 | calculated |
How It Works
How to Calculate Carbon Credit Value
Carbon credits represent verified emission reductions that can be sold on voluntary or compliance markets.
Formula
Gross Value = Credits (tons) * Price per Credit
Net Revenue = Gross Value - Broker Fee - Verification Cost
Market Prices
Worked Example
A project generates 500 credits at $30 each, with $5,000 verification and 10% broker fee.
- 01Gross value: 500 * $30 = $15,000
- 02Broker fee: $15,000 * 10% = $1,500
- 03Total costs: $1,500 + $5,000 = $6,500
- 04Net revenue: $15,000 - $6,500 = $8,500
- 05Net per credit: $8,500 / 500 = $17.00/ton
Frequently Asked Questions
What is a carbon credit?
A carbon credit represents one metric ton of CO2 equivalent that has been reduced, avoided, or removed. Credits are verified by third-party standards like Verra or Gold Standard.
What is the difference between compliance and voluntary credits?
Compliance credits are required by regulations (e.g., EU ETS) and trade at higher prices. Voluntary credits are purchased by organizations choosing to offset, typically at lower prices.
How are carbon credits verified?
Projects undergo independent third-party audits to confirm emission reductions are real, additional, permanent, and measurable. Verification adds cost but ensures credibility.
Ready to run the numbers?
Open Carbon Credit Calculator