i)   A carbon credit is a permit that allows the holder to emit one ton of carbon dioxide.

ii)  Credits are awarded to countries or groups that have reduced their green house gases below their emission quota. 

iii) Carbon credits can be traded in the international market at their current market price. The goal of carbon credit is to stop the increase of carbon dioxide emissions.

iv)  The carbon credit system was ratified at the Kyoto protocol held in December 1997.

v)   For example, if an environmentalist group plants enough trees to reduce emissions by one ton, the group will be awarded a credit. If a steel producer has an emissions quota of 10 tons, but is expecting to produce 11 tons, it could purchase this carbon credit from the environmental group.