Definition of carbon credit
: a tradable credit granted to a country, company, etc., for reducing emissions of carbon dioxide or other greenhouse gases by one metric ton below a specified quota Once each member's emissions are converted into tradable credits, the exchange works like any financial market. If participants reduce their emissions below their target, they can sell their carbon credits on the exchange for a profit. If they fail to reduce their emissions, they must buy credits from others.— Al Gore, An Inconvenient Truth, 2006 Under these “cap and trade” arrangements, governments impose limits on the amount of carbon that factories or companies are allowed to emit, and require those who want to exceed the limit to buy “carbon credits.”— Jesse Ellison, Newsweek, 14 July 2008 If a fast-growing country like China accepted an emissions cap and then overshot it, they would have to purchase carbon credits on the international market.— Ralph Nader and Toby Heaps, Wall Street Journal, 3 Dec. 2008 — see also carbon offset
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