Carbon credits are a market-based mechanism designed to reduce greenhouse gas emissions and mitigate the impact of climate change. The concept is based on the cap-and-trade principle, where a central authority sets a limit or cap on the amount of carbon dioxide and other greenhouse gases that can be emitted by industries, power plants, and other entities. Companies that emit less than their allotted limit can sell their unused allowances as carbon credits to other companies that exceed their limits. This creates a financial incentive for companies to reduce their emissions and invest in cleaner technologies. One carbon credit represents the right to emit one metric ton of carbon dioxide or an equivalent amount of other greenhouse gases. The carbon credit system was introduced as part of the Kyoto Protocol, an international agreement to reduce greenhouse gas emissions, which was adopted in 1997. Since then, various carbon trading schemes have been implemented around the world, including the European Union Emissions Trading System (EU ETS), the largest such scheme in operation.
emissions, climate change, greenhouse gases, cap-and-trade, carbon dioxide, Kyoto Protocol, carbon trading, EU ETS, clean technology
CITATION : "Robert Anderson. 'Carbon Credits.' Design+Encyclopedia. https://design-encyclopedia.com/?E=431461 (Accessed on December 21, 2024)"
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