what are carbon credits 
carbon credits are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases ghgs one credit permits the emission of one ton of carbon dioxide or the equivalent of other greenhouse gases carbon credits are also known as carbon offsets the carbon credit is half of a cap and trade program companies that pollute are issued credits that allow them to continue to pollute up to a certain limit that s periodically reduced the company can sell any unneeded credits to other companies that need them so private companies are doubly incentivized to reduce greenhouse emissions first they must spend money on extra credits if their emissions exceed the cap and second they can make money by reducing their emissions and selling their excess allowances proponents of the carbon credit system say that it leads to measurable verifiable emission reductions from certified climate action projects and that it is critical way that governments and private enterprises can work to address the climate crisis there are a range of carbon compliance markets in operation across the world 