A carbon credit is essentially an allowance given to a company from its government allowing one ton of carbon dioxide production per credit. When a company produces more carbon than it has credits for, it must purchase credits from another source, such as another company that improved it emissions and has spare credits. This created a market in trading carbon, as well as farming carbon. There are loopholes and difficulties in the program that can allow environmental damage in areas where the system is not monitored closely, but overall carbon credits have not only provided a tangible benefit to companies to go green, but also created a new market, giving the economy a little boost.
Carbon Credits and the New Market they have Created