Carbon Credit Explained: Meaning, Types, Process, and Risks
A carbon credit is one of the most important environmental commodities in modern energy and commodity markets. In simple terms, it is a tradable unit that usually represents one metric ton of carbon dioxide equivalent, or CO2e, reduced, removed, or sometimes avoided under defined rules. Understanding carbon credits helps businesses manage emissions costs, investors assess climate-related risk, and students make sense of the fast-growing market where policy, finance, and environmental science meet.