Carbon Credit

Carbon credits are the units of a traded market, with prices based on supply and demand, for permits or allowances that allow holders to emit one ton of carbon dioxide or other greenhouse gases. There are two types of credits: 1. Voluntary emissions reduction (VER): A carbon offset that is exchanged in the over-the-counter or voluntary market for credits. 2. Certified emissions reduction (CER): Emission units (or credits) created through a regulatory framework with the purpose of offsetting a project’s emissions. The main difference between the two is that there is a third-party certifying body that regulates the CER as opposed to the VER.