What are Carbon Credits? Landfill Gas

Updated October 2026: This article has been revised to clarify the difference between carbon credits and emissions allowances, explain their relevance to landfill gas and electricity generation, and update references to carbon-crediting programmes.

Carbon Credits Explained

A carbon credit generally represents one metric tonne of carbon dioxide equivalent (CO2e) reduced, avoided or removed under a recognised crediting programme. For landfill gas projects, credits can arise from capturing and destroying methane that would otherwise escape into the atmosphere.

What are carbon credits for landfill gas and electricity? They are a way of recognising qualifying emissions reductions from a landfill project. An eligible project may earn credits through methane destruction and, where its accounting method permits, the displacement of more emissions-intensive energy generation.

However, capturing gas or producing electricity does not automatically earn credits. The project must satisfy the chosen Carbon Emissions Reduction programme’s eligibility, measurement and verification requirements.

Key Takeaways

• One carbon credit generally represents one tonne of carbon dioxide equivalent, not one tonne of methane.
• Eligible landfill projects can earn credits by collecting and destroying methane.
• Electricity sales and carbon-credit income may support the same project, subject to the applicable rules.
• Carbon credits differ from the emissions allowances used in cap-and-trade systems.
• Existing legal obligations, project history and additionality can affect eligibility.
• Reliable monitoring and independent verification are essential to substantiating credited reductions.

Trading in Carbon Credits

Carbon credits allow a project owner to transfer the recognised benefit of qualifying emissions reductions or removals to a buyer. Businesses and other organisations may purchase credits to support climate action or use them towards an eligible emissions-related commitment.

When a credit is used, it is normally retired in a registry. Retirement records that the credit has been used and prevents it from being sold on for another use.

The Carbon Offset Guide, produced by the Greenhouse Gas Management Institute and Stockholm Environment Institute, explains the definition and use of carbon credits.

How Landfill Gas Projects Can Generate Carbon Credits

Decomposing organic waste produces landfill gas containing methane. Collecting this gas and burning it in suitable equipment converts methane into carbon dioxide, reducing its warming impact compared with allowing the methane to escape.

A project may use an enclosed flare, an electricity-generating engine or another eligible gas-use system. The crediting rules determine which activities qualify and how their benefits are calculated.

The starting point is the baseline: the emissions expected without the credited activity. The project must demonstrate qualifying reductions against that baseline, allowing for project emissions and any required deductions.

Effective landfill gas extraction systems provide the physical foundation. Credit calculations also depend on evidence of how much methane was collected and destroyed.

Carbon Credits for Landfill Gas and Electricity

A landfill gas electricity project can have two distinct climate benefits:

1. Methane destruction: collecting and combusting methane that would otherwise escape.
2. Avoided energy emissions: generating useful electricity that displaces a more emissions-intensive source.

The US EPA’s Landfill Gas Energy Benefits Calculator distinguishes direct methane reductions from avoided energy emissions. An environmental-benefits estimate, however, is not a certificate of entitlement to saleable credits.

If a landfill already collects and flares its gas, installing an engine does not make all the existing methane destruction a new reduction. The baseline and applicable method determine what additional benefit can be credited.

Can a Project Earn Both Electricity Revenue and Carbon-Credit Income?

Potentially, yes. Electricity sales and carbon-credit sales can provide separate sources of income. Their combination must comply with the chosen programme’s additionality and accounting rules, as well as relevant contracts and other environmental claims.

Verra is the non-profit standard-setting body that manages the Verified Carbon Standard (VCS), the world’s leading greenhouse gas crediting program.

For example, Verra specifies additional conditions for certain projects seeking its Core Carbon Principles label when they receive income alongside carbon-credit revenue. Energy revenue therefore needs to be considered in the eligibility assessment.

Global Carbon Credits and Crediting Programmes

There is no single set of rules covering every landfill worldwide. Developers must select a programme and methodology that apply to their location and proposed activity.

Examples include:

• Verra’s landfill gas methodology, covering eligible flaring and gas-use activities.
• The Climate Action Reserve’s US Landfill Protocol, with requirements for relevant US projects.
• ACR’s Landfill Gas Destruction and Beneficial Use methodology, which includes eligible US activities and certain improvements to gas collection.

October 2026 methodology update: Verra’s VMR0016 is active. ACM0001 and AMS-III.G are scheduled to become inactive as standalone VCS methodologies on 1 December 2026. Existing projects have specific transition provisions; this does not mean they must all stop crediting on that date. Check Verra’s current guidance before registration or renewal.

A Good Way to Think of Carbon Credits

Think of a carbon credit as a recorded, transferable claim to a measured climate benefit. For a landfill project, the important question is how much qualifying methane reduction occurred compared with the baseline.

Additionality means demonstrating that the credited benefit goes beyond what would otherwise happen, as assessed under the programme’s rules. Legal requirements, normal practice and project finances can all matter.

This is why an existing gas system cannot simply assume that every tonne it destroys will earn credits. Some programmes provide pathways for eligible improvements, but those improvements must meet their specific tests.

What About UK Landfill Sites?

UK operators should examine their existing gas-management obligations before assuming carbon-credit eligibility. The site’s permit, regulator and chosen crediting method need to be considered together.

The Environment Agency’s landfill gas management guidance covers the regulatory framework, control measures and performance monitoring. Compliance with existing obligations should not be confused with a new, creditable reduction.

What Are Emissions Trading or Cap-and-Trade Schemes?

Cap-and-trade schemes limit emissions from participating sources. An emissions allowance gives its holder permission to emit a specified quantity under that scheme.

This differs from a project-based carbon credit, which represents a qualifying reduction or removal. The European Commission explains that an EU ETS allowance gives the right to emit one tonne of CO2 equivalent.

Some compliance systems accept specified offset credits, subject to restrictions. A voluntary landfill credit cannot automatically be substituted for an allowance in any emissions trading system.

Are Carbon Markets a Reliable Way to Reduce Emissions?

The value of a credit depends on the quality of the underlying project and its accounting. Buyers and developers should examine the baseline, additionality, monitoring, verification and registry records.

For landfill projects, useful evidence includes gas-flow measurements, methane concentrations, destruction-device operating records and instrument calibration. The applicable methodology determines the required measurements and calculations.

The carbon-crediting project cycle typically involves project documentation, assessment, monitoring, verification and credit issuance. The precise process varies between programmes.

Operators should assess the cost of meeting these requirements alongside potential credit income. A project’s technical climate benefit and its commercial case for selling credits are related questions, but each needs its own assessment.

Carbon Credits of Different Types

It helps to distinguish three broad categories:

• Emissions-reduction credits: from qualifying activities that reduce or avoid emissions, including eligible landfill methane destruction.
• Carbon-removal credits: from activities that remove carbon dioxide from the atmosphere and store it.
• Emissions allowances: permissions to emit within a regulated trading system.

Older landfill carbon-finance discussions often refer to Certified Emission Reductions, or CERs, under the Kyoto Protocol’s Clean Development Mechanism. These historical terms should not be treated as a complete description of today’s markets.

Further Reading for Landfill Gas Operators

Understanding carbon credits is one part of assessing a landfill gas project. Gas collection, well design and dependable operation determine whether the project can capture and use the available resource effectively.

For practical guidance on the collection system, explore our Landfill Gas Extraction Well Design Techniques & Methods ebook.

You can also browse our articles on landfill gas flares and landfill gas monitoring.

Frequently Asked Questions About Carbon Credits

What is a carbon credit in simple words?

A carbon credit is a transferable unit representing a recognised climate benefit, generally one tonne of carbon dioxide equivalent reduced, avoided or removed.

How do landfill gas projects earn carbon credits?

Eligible projects collect and destroy methane, measure qualifying reductions against a baseline and complete the crediting programme’s assessment and verification process.

Can a landfill gas flare generate carbon credits?

Yes, eligible flaring projects can qualify under recognised methodologies. Producing electricity is not always necessary, but the project must meet the relevant rules.

Does generating electricity automatically create carbon credits?

No. Eligibility depends on the programme, baseline and additionality assessment. Existing methane destruction cannot automatically be claimed again when a project switches from flaring to electricity generation.

Is one tonne of methane equal to one carbon credit?

No. Credits are expressed in carbon dioxide equivalent. The methodology specifies the methane conversion factor and the deductions needed to calculate qualifying reductions.

How much does one carbon credit sell for?

There is no universal price. Budget using a dated offer or agreement for the relevant credit type, and account for development, monitoring, verification and selling costs. An emissions-allowance price is not a reliable substitute for a landfill-credit price.

Who pays for carbon credits?

Buyers include businesses and other organisations supporting climate action or meeting commitments that permit the relevant credits. Purchases may be arranged directly or through intermediaries.

Can an existing landfill gas system qualify?

Possibly. Some methodologies cover eligible improvements to existing systems. Qualification depends on the project’s history, legal obligations and the specific rules for demonstrating additional reductions.

Greenhouse gases emitted anywhere in the world make a contribution to global warming and climate change.  But, the opposite is also correct, removing or reducing greenhouse gases anywhere helps stop climate change.

We hope that this has explained the initial question which was: “What are Carbon Credits? – Landfill Gas”

[Published November 25, 2012. Rewritten October 2026.]