Economics Carbon Trading Questions
The role of carbon credits in carbon trading is to serve as a unit of measurement for greenhouse gas emissions. Carbon credits represent a certain amount of emissions that can be bought, sold, or traded in the carbon market. They are used to incentivize companies and organizations to reduce their emissions by allowing them to offset their own emissions by purchasing credits from entities that have successfully reduced their emissions. This system helps to create a financial incentive for reducing greenhouse gas emissions and encourages the transition to a low-carbon economy.