How It Works
Corporations have multiple ways to balance their carbon liability. They can reduce their carbon emissions (their "carbon footprint") through capital investment, projects and demand reduction. They can purchase emission permits, be allocated quotas (such as European Union Allowances (EUA)) or buy carbon credits. The latter are largely produced by CDM projects (Clean Development Mechanism) and Joint Initiatives. These credits are largely traded in form of Certified Emission Reduction (CER), or Emission Reduction Unit (ERU). Voluntary Emissions Reduction (VER) have a similar function but have not registered / cannot be registered under the rules of the Kyoto Protocol.
Read more about this topic: Weighted Average Cost Of Carbon
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