Carbon credits are a component of national and international attempts to mitigate the growth in concentrations of greenhouse gases (GHGs). In generic terms, a carbon credit is a tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas (tCO2e). One carbon credit is equal to one tonne of carbon dioxide, or equivalent gases.
Greenhouse gas emissions are capped and then markets are used to allocate the emissions among the group of regulated sources. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world. There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis.