What is a Carbon Credit?

Carbon Credit is a permit or certificate that allows the bearer to emit about 1 ton of Carbon Dioxide or CO2 or any other similar Greenhouse Gasses. This Credit is given to companies as an emission allowance to regulate the total carbon emission in the air in the industry. The primary goal of this is to reduce the amount of greenhouse gasses in the atmosphere like Carbon Di Oxide or CO2 which is the most common yet the most harmful of the greenhouse gasses.

Features of Carbon Credit:

One of the essential functions of Carbon credit is that it can be traded. Companies that don’t pollute the environment or reduces the pollutant discharge in the environment sell the certificate to the company which exceeds the discharge of pollutants in the environment so that overall release controlled. When we think of Carbon Credit, we generally think about protecting the environment. Yet, there are huge gains involved in the trading of Carbon Credit if appropriately practiced. Here are some of the basic features of Carbon Credit:

  1. INCREASED BENEFITS: Both domestic and multinational corporations can get a ton of benefits by trading the Carbon Credits they are issues, all the while protecting the environment from significant carbon emission.
  2. AIDING THE ENVIRONMENT-FRIENDLY COMPANIES: When someone purchases Carbon Credits, each of them is channeled environment-friendly environment and process and are trying to reduce the overall carbon emission.
  3. INCREASE IN JOBS IN THE PRIVATE SECTOR: As mentioned above, Carbon Credits can be traded for profit, companies, can, in return, open up several other projects and businesses which are not harmful to nature, and these projects can give way to more jobs to the unemployed youths.

How Carbon Credit Works?

Carbon Credit is generally a permit or a certificate that can be presented to both companies and nations by a regulatory or governmental body. Every Carbon Credit is valued against the emission of 1 ton of hydrocarbon fuels, for a specified period. The United Nations’ Intergovernmental Panel on Climate Change developed the Carbon Credit as a market-oriented protocol to reduce the total amount of carbon emitted into the atmosphere.  The companies or nations that allotted a certain number of Carbon credits can even trade them to gain upon vast amounts of profit as well.

Types of Carbon Credit:

VOLUNTARY EMISSIONS REDUCTION: This allows you to take over-the-counter voluntary attempts to reduce carbon emission.

CERTIFIED EMISSIONS REDUCTION: This is formed through a regulated framework by a third party that made to regulate the total carbon emission from a particular project.


Carbon Credit is a grand scheme to reduce the overall carbon emission to protect the atmosphere and the Ozone layer. With this effective yet environment-friendly approach, one can end up protecting the environment before time runs out.

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