A carbon credit is a generic term for any tradable certificate or let representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equal (tCO2e) equal to one tonne of carbon dioxide.
Carbon credits and carbon markets are part of national and international efforts to cut the concentrate of greenhouse gas (GHG). One carbon credit is equal to one tonne of carbon dioxide, or in some markets, carbon dioxide equivalent gases. Carbon trading is an apply of an emissions trading approach. Greenhouse gas emissions is cap and then markets is use to allocate the emissions among the group of regulated sources.
The goal is to allow market mechanisms to drive industrial and commercial processes in the direct of low emissions or less carbon intensive approaches than those used when there is no cost to emitting carbon dioxide and other GHGs into the atmosphere. Since GHG mitigation projects generate credits, this approach can 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 customers who is interest in lowering their carbon footprint. These carbon off setters by the credits from an investment fund or a carbon development company that has aggregated the credits from each project. Buyers and sellers can also use an exchange platform to trade, which is like a stock exchange for carbon credits. The credits is base in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is say in their price; voluntary units typically have less value than the units sold through the rigorously validated Clean Development Mechanism.