What is Carbon credit?
A carbon credit is a permit that allows the holder to emit a specific amount of carbon dioxide (CO2) — typically equivalent to 1,000 kg (or one metric ton).
Carbon credits serve as a financial tool to encourage the reduction of greenhouse gas emissions.
They are part of climate finance mechanisms aimed at combating climate change.
Individuals or organizations can earn carbon credits by:
Removing 1,000 kg of CO2 from the atmosphere.
Completing projects that promote renewable energy, reforestation, or carbon capture.
Providing proof of their emission reductions to a certifying agency.
Once earned, carbon credits can be sold to companies or governments looking to offset their emissions.
This creates a market for carbon credits, where the price is determined by supply and demand.
The Paris Agreement established a global carbon market, helping countries meet their emissions reduction targets by trading carbon credits.
A significant issue with carbon credits is the difficulty in verifying that the claimed emissions reductions actually occurred.
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