Funding carbon projects: which projects, and at what price?

The question almost always arrives at the same moment. A company has just finished its carbon footprint assessment, the reduction plan is on the table, and someone on the board asks what happens to the tons that will still be there at the end. Funding carbon projects is one possible answer. It is neither an obligation nor a shortcut, and it commits the company in a way an ordinary purchase does not.

What follows takes the buyer's point of view: which projects exist, which certification frameworks govern them, what a funded ton costs, and what that funding entitles you to say in public. On that last point, European law changes on September 27, 2026.

What funding a carbon project actually involves

The mechanism is straightforward in principle. A company pays a project developer, whether a forest manager, a farmer, an industrial operator or a local government, for a reduction or a sequestration of emissions that would not have happened without that funding. In return it receives recognition of the tons concerned, either as credits recorded in a registry and canceled in its name, or through a bilateral contract backed by a certified method.

There are two ways into the subject, and they are often confused:

• Direct project funding. The company identifies a project, contracts with its developer, and sometimes pays before the reduction has been confirmed. It knows where its money goes. It also carries part of the delivery risk.
• Buying credits on the voluntary market. The company acquires credits already issued, verified and registered, usually through an intermediary. The product is standardized and traceability back to the ground is more distant.

On paper both routes fund the same thing. They do not create the same relationship, nor the same level of control. We have set out how credits themselves work in our article on the carbon market.

Which carbon projects should you fund?

Projects fall into two families, and that distinction governs everything else.

Reduction and avoidance projects prevent emissions from occurring: retrofitting a building, changing livestock practices, anaerobic digestion of effluent, replacing an industrial process. The ton is not taken out of the atmosphere, it is never sent there.

Sequestration and removal projects take carbon that is already in the atmosphere and store it: afforestation, restoring degraded forest stands, hedgerow planting, wetland restoration, soil carbon storage, biochar, mineralization, geological storage.

Within that second family, the question that matters is how long the storage lasts. Biological storage can be undone by fire, storm or a change of landowner. Geological or mineral storage holds for centuries, at a substantially higher cost per ton. There is no universally right trade-off between the two. There is a trade-off you have to own and document.

Three further criteria are worth applying:

• Fit with your own business. A food company funding low carbon practices among its growers is acting on ground it understands and can explain. A services company funding the same project is writing a check.
• Proximity. A local project can be visited, described to staff and customers, and often interests regional authorities. A distant project costs less per ton and is far harder to verify yourself.
• Co-benefits. Biodiversity, water quality, rural employment, farm resilience. None of these are counted in tons, and they are often what justifies the price gap.

One route stays consistently underused: funding reductions inside your own value chain, at a supplier, a carrier or an upstream producer. The money then lowers your scope 3 emissions in your next assessment instead of sitting on a separate line. It is the only case where funding a reduction at a third party improves your own carbon result.

The frameworks that make funding defensible

Three reference frameworks matter to a company operating in Europe.

The EU Carbon Removals Certification Framework, known as the CRCF, was established by Regulation (EU) 2024/3012 of November 27, 2024 and entered into force on December 26, 2024. It covers permanent carbon removals, carbon farming and carbon storage in products. Certification methodologies are arriving through implementing acts, and a European registry of certificates is due four years after entry into force, in 2028. For a company, this is the framework to watch: it will set the reference level of rigor across Europe.

National state-backed schemes. Several member states run their own voluntary certification schemes, with methods approved by ministerial order and an external audit of every project. France's Label bas-carbone, covering forestry, agriculture and buildings, is the most developed of them and has been under reform since 2025 to turn bilaterally sold reductions into transferable credits.

International voluntary standards, principally Verra and Gold Standard, cover most of the global market. Their quality bar has tightened under sustained criticism, with common quality principles set out by the ICVCM. A certified credit remains a floor, not a guarantee of outcome.

What does a funded ton cost?

The clearest published figures come from the French state scheme, which documents prices for certified projects between €8 and €125 per metric ton of CO2 equivalent, averaging €35. That spread is not a market anomaly. Prices are negotiated bilaterally and depend on the method used, the location, the co-benefits, any public subsidy the developer already receives and how much of the cost they can carry themselves.

Credits from international projects sit well below that range. A very low price deserves an explanation before it is taken: it usually reflects low delivery costs in the host country, and occasionally weak additionality.

A rough order of magnitude. A food manufacturer with 60 employees whose assessment comes out at 4,200 tCO2e commits to a 25% reduction plan over five years. If it decides to fund 300 tons a year at that average price, the budget line lands at roughly €10,500 a year. The useful comparison is not with revenue, but with the communications budget and with the cost of the reduction measures being funded in parallel. That is where the real trade-off sits.

What this funding does not entitle you to say

Directive (EU) 2024/825 adds to the list of misleading commercial practices any claim, based on emissions offsetting, that a product has a neutral, reduced or positive impact on the environment. Member states were required to transpose it by March 27, 2026, and it applies from September 27, 2026. In plain terms: from that date a company can no longer connect a purchase of carbon credits to a claim about the impact of its products. Any company marketing into the EU is caught by this, wherever it is based.

The rule aligns with established carbon accounting practice. A contribution is reported and communicated separately from emissions, never as a deduction. A ton funded at a third party takes nothing off your inventory, it sits alongside it on a different line.

There is a defensible way to phrase this. It is simply longer: say what you measured, what you reduced, then what you funded, in that order and with no subtraction. It is also the only version that survives a precise question from a customer or a journalist.

Five checks before you sign

1. Additionality. Would the project have happened without your money? If the developer has already closed their funding elsewhere, you are paying for a reduction that was going to occur anyway.
2. Permanence and reversal risk. How long is the commitment, and what guarantees apply in the event of fire, storm or a sale of the land? Sound schemes hold a pooled buffer reserve to absorb those losses.
3. Uniqueness of the ton. Is the ton recorded in a registry, canceled in your name, and not already counted in the host country's national inventory? Double counting remains the most common flaw in international arrangements.
4. Independent third-party verification. Who checked, against which method, and is the report available to read?
5. Where the money actually goes. What share of your payment reaches the project developer, and what share stays in the chain of intermediaries? The answer is rarely volunteered.

If any one of those five answers is missing, the project is not ready to receive your funding.

The best carbon dollar is not always a credit

Before opening a contribution line, it is worth comparing what the same amount would buy elsewhere. An internal reduction measure with a low abatement cost, an investment at a key supplier, training that genuinely shifts practice: that money lowers your own assessment, and some of it is partly grant funded. We have set out the schemes worth applying for in our article on funding your environmental transition.

Funding carbon projects retains a real use: it brings into existence projects that do not pencil out financially on their own. That use holds on one condition, which is that it comes after measurement and after reduction rather than instead of them. It is the logic behind a validated SBTi target, which accepts contribution only alongside a reduction pathway, never as a substitute for one.

In practice

If the question of funding carbon projects has come up in your organization, it rarely comes alone. It arrives with a customer request, an investor questionnaire or an RFP asking for a trajectory. The answer starts with a number: how much your activity emits, and where.

Releaf Carbon works across that sequence, from the carbon footprint assessment to the reduction plan, then on contribution decisions where they are justified. If the subject has landed on your desk this year, we can look together at what deserves your budget first.