Carbon credits are a key tool in the fight against climate change. Each credit represents one ton of carbon (or the equivalent of another greenhouse gas) which is either removed from or prevented from being emitted into the atmosphere. The carbon markets create an incentive for companies to reduce their greenhouse gasses, and offer investors a way to reduce the impact of climate change.
Carbon credits are created by projects that reduce, avoid, or remove greenhouse gas emissions from the atmosphere. For example, a wind farm project may generate carbon credits by replacing electricity from fossil fuel sources.
The price of carbon credits is determined by supply and demand and can fluctuate depending on a variety of factors, including market conditions, the quality and cost of underlying projects, and changing global policies.