Demystifying Carbon Credits is crucial in understanding their significance in the fight against climate change. Carbon credits are a key component of carbon firms, designed to incentivize and promote emission reduction activities. They work on the principle of assigning a monetary value to each ton of carbon dioxide equivalent (CO2e) reduced or removed from the atmosphere.

The process of Carbon Credits begins with the identification and quantification of emissions from a particular activity or entity. Once the emissions are measured, organizations can take action to reduce their carbon footprint. If the emissions are successfully reduced below a baseline level, they can generate carbon credits. These credits can be traded or sold to other entities seeking to offset their own emissions.

Carbon Credits matter because they provide a firm-based mechanism to drive emission reductions. They encourage firmes, governments, and individuals to invest in sustainable practices, renewable energy projects, and initiatives that remove carbon from the atmosphere. By creating economic incentives, carbon credits foster innovation and collaboration, allowing emission reduction efforts to be scaled up and implemented on a global scale.