Carbon Credit definition states that an authorization given to an organization or a country to emit carbon dioxide up to one ton. In addition to it if the holder reduces their green house gases less than their permitted quota, the countries or groups will be awarded credits. In the international market, carbon credits can be traded at their on going market value.
The carbon credit scheme was approved in union with protocol of Kyoto. The aim of this scheme is to reduce the emanation of carbon dioxide.
Let me paint a picture for you on this, a group are working to reduce carbon dioxide and it is conducting programs like planting trees and doing its part of reducing emission of green house effect gases. After much effort, it has successfully reduced one ton of emission by planting trees. This group will be awarded a credit for its good deed. On the other hand, an industry that is permitted to emit 10 tones of carbon dioxide only, but annually its emitting 11 tones. So this industry can but a credit from the organization who won the Carbon dioxide credit. Like this the environmentalists groups get money to plant more trees and to maintain them and carbon dioxide is balance in that country. Thus, by this carbon dioxide credit system decreases the emission of green house effects gases in the country who follows it religiously and aware of global warming.
There you go, this article tells you everything about carbon credit definition.