Encyclopedia of Investment Terminology

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Carbon Credit

With the objective of minimizing global warming, international emissions trading schemes have taken place and they have been named Carbon Credits. Its goals is to reduce the greenhouse effect at an industrial level, and the carbon credit seeks to achieve this goal by setting a cap to the total annual emissions, and allowing the market to set a market price to any shortfall through trading.

Carbon credits can then be purchased and sold in the markets and used to finance carbon reduction schemes.

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