Carbon Credit

A carbon credit grants the group holding it the right to emit a specified amount of carbon dioxide or other greenhouse gasses. It’s an attempt to limit damage to the ozone, since it’s become sort of accepted that it’s not completely preventable, and capitalize on it a bit.

This system came into play around the end of the 20th century, presented by the International Panel on Climate Change (IPCC), and was outlined by the Kyoto Protocol.

The protocol divides countries into developed nations, and developing nations. The developed nations have limitations on them, because they're considered to have resources that would allow them to reduce their emissions, while the developing groups can be rewarded for making efforts to reduce their emissions (sort of a meet-you-where-you-are approach). The countries are assigned a limit of emissions, and then companies in those countries can purchase credits from the government. Making someone pay for something makes them think about how they use it. Plus, if a company is caught going over their credits, they’re fined.

Say you own a company that makes rubber chickens. Rubber being melted down creates air pollution. For the sake of everyone in the world having access to rubber poultry fun, you could buy credit from your government to excuse the unavoidable pollution. Win-win for the environment, and the government issuing the credit (and the people buying rubber chickens).

The kicker is that, if a country is caught going over, they are punished by having their next year’s credit reduced. So definitely count your chickens before you, uh...make them, in this case.