CT: A carbon credit (often called a carbon offset) is a financial instrument that represents a tonne of CO2 (carbon dioxide) or CO2e (carbon dioxide equivalent gases) removed or reduced from the atmosphere from an emission reduction project, which can be used by governments, industry or private individuals to offset damaging carbon emissions that they are generating.
Carbon credits are associated with either removing existing CO2 or CO2e emissions from the atmosphere in the case of carbon sequestration from forests and planting of trees or the reduction of future CO2 or CO2e emissions from renewable energy and energy efficiency projects that displace fossil fuel power generation production or industrial processes.
S: CP – http://www.carbonplanet.com/introduction_to_carbon_credits (last access: 9 January 2015)
N: 1. c.1600, “state of being environed” (see environ + -ment); sense of “the aggregate of the conditions in which a person or thing lives” first recorded 1827 (used by Carlyle to render German Umgebung); specialized ecology sense first recorded in 1956.
2. A permit that allows the holder to emit one ton of carbon dioxide. Credits are awarded to countries or groups that have reduced their green house gases below their emission quota. Carbon credits can be traded in the international market at their current market price.
3. The carbon credit system was ratified in conjunction with the Kyoto Protocol. Its goal is to stop the increase of carbon dioxide emissions.
For example, if an environmentalist group plants enough trees to reduce emissions by one ton, the group will be awarded a credit. If a steel producer has an emissions quota of 10 tons, but is expecting to produce 11 tons, it could purchase this carbon credit from the environmental group. The carbon credit system looks to reduce emissions by having countries honor their emission quotas and offer incentives for being below them.
S: 1. OED – http://www.etymonline.com/index.php?allowed_in_frame=0&search=carbon+credit&searchmode=none (last access: 9 January 2015). 2 & 3. INVESTOPEDIA – http://www.investopedia.com/terms/c/carbon_credit.asp (last access: 9 January 2015).