Carbon credits are certificates or permits representing the right to emit a certain amount of greenhouse gases (GHGs), typically carbon dioxide. They are traded on carbon markets, allowing companies or countries to buy and sell credits to meet emission reduction targets.
Key aspects:
- Emission reduction: Carbon credits incentivize reducing GHG emissions.
- Tradable certificates: Credits can be bought and sold on carbon markets.
- Verified emissions: Credits are issued based on verified emission reductions.
Benefits:
- Financial incentives: Carbon credits provide financial benefits for reducing emissions.
- Emission reduction: Encourages companies and countries to reduce their GHG emissions.