The carbon credit system is one of the tools for combating global emissions of greenhouse gases. A carbon credit represents a tradable unit that quantifies the reduction or removal of one metric ton of carbon dioxide (CO₂) or its equivalent in other greenhouse gases. These credits can be issued by implementing projects that reduce or remove emissions, such as renewable energy installations, energy efficiency improvements, or afforestation activities.
The LULUCF sector can both emit greenhouse gases and sequester carbon. This is why it is central in the carbon credit markets.
The article envisages different aspects of the carbon credit markets. One them is related to the work done so far in the EU in this field including the European Union Trading System (EU ETS), sectors that have mandatory requirement to purchase EU ETS credits as well as proposed Union certification framework. The role of projects like LIFE OrgBalt in the development of the new regulation is also described. Other issues covered by the article include voluntary carbon schemes and reliability of carbon credits.