What are Carbon Credits?

A carbon credit (often called a carbon offset) is a financial instrument that represents a tonne of CO₂ (carbon dioxide) or CO₂e (carbon dioxide equivalent gases) removed or reduced from the atmosphere from an emission reduction project, which can be used by governments, industry, or private individuals to offset damaging carbon emissions that they are generating.

How are Carbon Credits used?

Carbon credits are associated with either removing existing CO₂ or CO₂e emissions from the atmosphere in the case of carbon sequestration from forests and planting of trees or the reduction of future CO₂ or CO₂e emissions from renewable energy and energy efficiency projects that displace fossil fuel power generation production or industrial processes.