What Is Carbon Credit Trading?
Carbon credit trading offers a way for companies to reduce their overall carbon dioxide output in order to comply with pollution laws and regulations. In a typical carbon emissions trading scheme, companies buy or sell carbon credits. One ton of carbon is usually equivalent to one carbon credit. Collectively, the trading companies must adhere to an overall total carbon emissions limit. Carbon credit trading is also referred to as a cap and trade transaction, carbon emission trading, CO2 emissions trading, or simply emissions trading. Carbon credit emissions trading occurs both nationally and internationally, and the limits and trading rules that apply to each emissions trade vary from country to country. Some countries promote voluntary emissions trading by offering tax credits or other incentives to companies that participate in the schemes. Other countries make carbon credit trading mandatory. For example, a number of countries have signed an international emissions trading agreement
