What is carbon credit ? Explain.

Carbon credits are a key component of national and international attempts to mitigate the growth in concentration of Green House Gases (GHGs). One Carbon credit is equal to one ton of carbon. Carbon trading is an application of an emissions trading approach. Green House Gas emissions re caped and then markets are used to allocate the emissions among the group of regulated sources. The idea is to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions or less "carbon intensive" approaches than are used when there is no cost to emitting carbon dioxide and other GHGs into the atmosphere. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world. They are a part of international emission trading norms. They incentivise companies or countries that emit less carbon. There are two distinct types of Carbon Credits: Carbon Offset Credits (COCs) and Carbon Reduction Credits (CRCs). Carbon Offset Credits consist of clean forms of energy production, wind, solar, hydro and biofuels. Carbon Reduction Credits consists of the collection and storage of Carbon from our atmosphere through reforestation, forestation, ocean and soil collection and storage efforts. Both approaches are recognized as effective ways to reduce the Global Carbon Emissions crisis. The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions. The IPCC (Intergovernmental Panel on Climate Change) has observed that Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation. India is one of the countries that have 'credits' for emitting less carbon. India and China have surplus credit to offer to countries that have a deficit. Waste disposal units, plantation companies, chemical plants and municipal corporations can sell the carbon credits and make money.