Carbon credits, also known as carbon offsets, are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases.
One credit permits the emission of one ton of carbon dioxide or the equivalent of other greenhouse gases.
Companies that pollute are awarded credits that allow them to continue to pollute up to a certain limit, which is reduced periodically.
Meanwhile, the company may sell any unneeded credits to another company that needs them.
Proponents of the carbon credit system say that it leads to measurable, verifiable emission reductions from certified climate action projects and that these projects reduce, remove or avoid greenhouse gas emissions.