Category Archives: Carbon trading

Green glossary

Carbon trading: Carbon offsets for the corporate set. A central authority (usually a government or international body) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits, which represent the right to emit a specific amount. If a company must exceed its cap, it must buy credits from those who pollute less. In effect, a “trade” is taking place: the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed.