Carbon Credits

A carbon credit is an allowance or offset equal to one metric ton of carbon dioxide (CO2) or other greenhouse gas (GHG) equivalent calculated in tons of CO2. Carbon markets allow individuals, companies, or states to finance emissions reductions in other locations, for example, through projects that create or promote renewable energy, energy efficiency, or reforestation, as a means to lower their own carbon footprint. Trade of carbon credits within compliance and voluntary markets is a multibillion-dollar enterprise that makes up a cornerstone of international efforts to combat climate change. Buying and selling emissions allowances often means that mitigation can be achieved at lower costs.

Carbon trade was modeled after an experiment in the United States in the early 1990s involving the trade of sulfur dioxide ...