Carbon Credit

Carbon credit, issued by the United Nations Framework Convention on Climate Change (UNFCCC) to nations of the world, is a permit that allow them to emit a certain amount of carbon dioxide or other greenhouse gases (GHGs). Governments then issues carbon credits to companies. One carbon credit allows the emission of one ton of carbon dioxide or the equivalent of other greenhouse gases. Carbon credits are also linked with financial incentives, and surplus carbon credits can also be traded. Glasgow COP26 climate change summit agreed in November 2021 to create a global carbon credit offset trading market. UNFCCC oversees international carbon crediting programs under Article 6.4 of the Paris Agreement, issuing credits like Certified Emission Reductions (CERs).