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

Word History

First Known Use

1990, in the meaning defined above

Time Traveler
The first known use of carbon credit was in 1990

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Cite this Entry

“Carbon credit.” Dictionary, Merriam-Webster, Accessed 18 May. 2024.

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