The fight against climate change requires multiple strategies working in concert. While operational carbon emissions—those from energy use in buildings and transportation—often dominate sustainability discussions, embodied carbon presents an equally urgent challenge that’s finally getting the attention it deserves. Carbon credits play a crucial role in addressing embodied carbon impacts, creating a bridge between current realities and a low-carbon future.
What Are Carbon Credits?
At their core, carbon credits are financial instruments representing the reduction or removal of one metric ton of carbon dioxide (or equivalent greenhouse gases) from the atmosphere. These credits create a market for carbon reduction, allowing organizations to invest in climate action beyond their direct operations.
Unlike direct emissions reductions within a company’s operations, carbon credits finance projects that might otherwise remain underfunded—from forest protection to innovative carbon capture technologies. When held to high quality standards, carbon credits ensure measurable climate benefits and channel critical funding to impactful initiatives.
The Embodied Carbon Challenge
Embodied carbon refers to the greenhouse gas emissions associated with materials and construction processes throughout a product’s entire lifecycle. This includes everything from raw material extraction and manufacturing to transportation, installation, and end-of-life treatment.
For many products and buildings, these embodied emissions can represent 40-70% of their lifetime carbon footprint. Unlike operational emissions that occur gradually over time, embodied carbon is “front-loaded”—released primarily during production before a product is even used. This creates both urgency and unique challenges for reduction efforts.
A steel beam in a commercial building, for instance, carries its carbon burden from the moment iron ore is mined and processed. By the time that beam is installed, most of its climate impact has already occurred. This fundamental difference from operational carbon necessitates different approaches to mitigation.
How Carbon Credits Address Embodied Carbon
Carbon credits offer several strategic approaches to addressing embodied carbon. First, they provide a mechanism for neutralizing unavoidable emissions. Even with best practices in material selection and manufacturing efficiency, some embodied carbon remains unavoidable with current technologies. High-quality carbon credits provide a mechanism to counterbalance these emissions by funding equivalent reductions elsewhere.
For example, a building developer might purchase carbon credits to offset the embodied carbon in concrete and steel—materials essential for structural integrity but carbon-intensive in production. These credits might fund reforestation projects that sequester an equivalent amount of carbon.
Second, carbon credit programs can directly finance materials innovation. Companies looking to reduce embodied carbon can invest in carbon credit projects specifically targeting innovations in alternative cement formulations, mass timber construction techniques, recycled building materials, and low-carbon steel production methods. These targeted investments accelerate the transition to materials with intrinsically lower embodied carbon, addressing the problem at its source.
Third, carbon credits enable circular economy solutions by supporting projects that extend material lifecycles and promote circularity. This keeps resources in use and reduces the need for virgin material extraction and processing, which typically carries high embodied carbon loads. Projects might include facilities for construction waste recovery, building material banks, or advanced recycling technologies for complex materials. These initiatives address embodied carbon by reducing the demand for new material production.
Ensuring High-Quality Carbon Credits for Embodied Carbon
Not all carbon credits are created equal. When addressing embodied carbon through carbon credits, organizations should evaluate projects along three key dimensions.
Additionality is perhaps the most critical dimension. High-quality carbon credits represent carbon reduction or removal that would not have occurred without the financial support from the credits. For embodied carbon applications, this means funding projects that genuinely advance carbon-reducing practices beyond business as usual. A forestry project that would have happened anyway, for instance, doesn’t provide the true climate benefit needed to balance embodied carbon impacts.
Accurate estimation is equally important. With embodied carbon, precise measurement is essential. Quality carbon credit programs use science-based methodologies to calculate both the embodied carbon footprint being addressed and the carbon benefit of the funded project. Life Cycle Assessment (LCA) provides the foundation for these calculations, ensuring credits represent real carbon reductions.
The co-benefits dimension recognizes that the best carbon credit projects deliver environmental and social benefits beyond carbon reduction. For embodied carbon applications, this might include projects that protect biodiversity in material-sourcing regions, support sustainable livelihoods for communities affected by resource extraction, or improve air and water quality in manufacturing areas. These broader benefits create a more holistic approach to sustainability.
A Strategic Tool, Not a Silver Bullet
Carbon credits serve as a valuable tool in addressing embodied carbon, but they’re most effective as part of a comprehensive strategy. The priority remains reducing embodied carbon at the source through material selection, design optimization, and manufacturing efficiency. Carbon credits then address the remaining emissions that cannot yet be eliminated.
Industry leaders approach carbon credits as complementary to—not replacements for—direct reductions in their material supply chains. While working to minimize embodied carbon through improved sourcing and production, they strategically use high-quality carbon credits to address residual emissions and drive innovation in areas where direct reduction is currently limited by available technology.
Consider the case of a major electronics manufacturer that first conducts detailed life cycle assessments to identify embodied carbon hotspots in their product line. They might redesign products to use recycled plastics and implement energy efficiency measures at their factories—direct reduction strategies. For the remaining embodied carbon in semiconductor production, where alternatives don’t yet exist, they might purchase carbon credits from projects developing next-generation materials with lower carbon footprints.
The Future of Carbon Credits in Embodied Carbon Management
As embodied carbon receives increasing attention, the carbon credit market is evolving to better address these specific challenges. We’re seeing the emergence of material-specific credits that target high-impact materials like cement, steel, and aluminum, directing funds specifically to decarbonizing these supply chains. This targeted approach ensures that carbon credit investments directly tackle the most significant sources of embodied carbon.
Enhanced transparency is another important trend, with digital tracking systems improving traceability from embodied carbon sources to credit-funded projects. These systems increase confidence in the connection between measured impacts and verified reductions, addressing past criticisms of carbon credit programs. Blockchain technology, for instance, is being deployed to create immutable records of carbon reductions and prevent double-counting.
Perhaps most promising is the integration of carbon credits with procurement. Forward-thinking organizations are embedding carbon credits directly into material purchasing decisions, creating dedicated funds based on the embodied carbon content of materials they source. This approach creates a direct financial incentive for suppliers to reduce the carbon intensity of their products, driving change throughout the value chain.
Conclusion
Carbon credits offer a strategic approach to addressing embodied carbon while the industry works toward longer-term structural reductions. By funding climate projects that deliver measurable, verified benefits, these market mechanisms help channel resources toward carbon reduction and removal initiatives.
For organizations serious about reducing their full carbon footprint, high-quality carbon credits provide an essential complement to direct reductions in embodied carbon. When used strategically—with clear standards for quality and transparency—carbon credits help accelerate the transition to a low-carbon built environment and product ecosystem while supporting critical climate initiatives worldwide.
As we continue to grapple with the climate challenge, understanding and effectively utilizing tools like carbon credits will remain vital. The embodied carbon in our built environment and products represents both a significant challenge and an opportunity for meaningful climate action. Through thoughtful application of carbon credit mechanisms alongside direct reduction strategies, we can address these emissions and drive the innovations needed for a truly sustainable future.