A carbon credit is a unit of measurement used to quantify the amount of carbon dioxide or other greenhouse gas emissions that have been reduced, avoided, or removed from the atmosphere. These credits are used as a tool to encourage companies and organizations to reduce their carbon footprint and contribute to the global effort to mitigate climate change.
When a company or organization purchases carbon credits, they are essentially investing in a project or activity that reduces greenhouse gas emissions. This could include renewable energy projects, forest conservation initiatives, or energy efficiency improvements. The purchase of carbon credits is seen as a way to offset the carbon emissions that the organization is unable to reduce on its own.
Carbon credits are traded on various markets, including the voluntary and compliance markets, and their price can vary depending on supply and demand. The use of carbon credits has been criticized by some for allowing companies to continue emitting carbon while simply paying for credits, rather than making significant efforts to reduce their emissions.