What are Carbon Credits?

A Carbon Credit is usually referred to as a permit that grants a company or a business or a government to emit a certain amount of greenhouse gases equivalent in terms of Carbon Dioxide (CO₂). One carbon credit usually permits emission of a mass equivalent to 1 MT of Carbon Dioxide (CO₂).

In other words, a carbon credit can be considered as a measure of greenhouse emissions reduced or removed from the atmosphere or environment from an emission reduction project which can be used by governments, industry, or private individuals to compensate for the emissions they are respectively responsible for.

If accounted appropriately, carbon credits can be considered as a company’s Intangible assets which can be traded in the markets at prevailing market rates.