Explain carbon credits?

Question

Explain carbon credits?

Answer 1

Industrial polluters are each given a certain number of credits that allow them to emit a certain amount of greenhouse gases.  Some polluters may find that they can reduce their emissions and make a profit by selling the credits that they no longer need.  Another polluter will buy these credits so that it can increase its production (since increased production generally leads to increased emissions).  Both parties benefit from the trade.

Essentially carbon credits ensure that emissions remain at a constant level, but allow the sources of these emissions to vary.