Carbon credit

A carbon credit is the equivalent of the emission of one metric ton of carbon dioxide. The owner of a carbon credit can emit more greenhouse gas (as per the current rate established under the Kyoto Protocol). Carbon credits are allocated to countries or companies that participate in initiatives to reduce greenhouse gas emissions.

The implementation of carbon credits is supposed to help signatory countries respect their commitments under the Kyoto Protocol.

Several mechanisms govern the allocation of credits. One of these more especially concerns collaboration between industrialised countries and developing countries: the Clean Development Mechanism (CDM) conditions the issue of "carbon credits" to the financing of reduction projects in developing countries. Today, this type of system makes it possible for industrialised countries to come closer to their national targets defined in Kyoto. In the mid-term, for such a market to operate, industrialised countries must themselves become issuers of "carbon credits" and will therefore be forced to limit their emissions nationally.