Carbon credit: Definition
Carbon credits, also known as carbon allowances, function as permits for emissions. When a company acquires a carbon credit, typically from the government, it gains authorisation to emit one tonne of CO2. Carbon credits create a vertical flow of carbon revenue from companies to regulators, although companies with surplus credits can sell them to others.
Related Terms
ACCU
Australian Carbon Credit Units (ACCUs) are financial instruments awarded to eligible projects involving energy efficiency, renewable energy generation…
Carbon dioxide (CO2) emissions
Emissions refer to the discharge of greenhouse gases or their precursors into the atmosphere within a defined region…
Offsetting
Carbon offsetting is compensating for emissions by buying carbon credits, each representing one tonne of CO2-e avoided or…
Carbon sink
Carbon storage, also known as a carbon sink, is where captured carbon, once removed from the atmosphere, is…