Q. Consider the following statements about ‘Carbon Credit’:
1. A carbon credit is a tradable permit.
2. The holder of the credit has the right to emit ten ton of carbon dioxide or an equivalent of another greenhouse gas.
3. The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases.
Which of the statements given above is/are correct?

[A] 1 and 2 only

[B] 1 and 3 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Explanation:

  • A carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas.
  • The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming.
  • Carbon credits are market mechanisms of the minimization of greenhouse gases emission. The introduction of carbon credit was ratified in the Kyoto Protocol.
  • The Paris Agreement validates the application of carbon credits to reduce emissions of the greenhouse gases and sets the provisions for the further facilitation of the carbon credits markets.

Types of Carbon Credits

There are two types of the carbon credits:

  • Voluntary emissions reduction (VER): A carbon offset that is exchanged in the over-the-counter or voluntary market for credits.
  • Certified emissions reduction (CER): Emission units (or Carbon credits) created through a regulatory framework with the purpose of offsetting a project’s emission. The main difference between the two is that there is a third party certifying body that regulates the CER as opposed to the VER.

Source: https://www.business-standard.com/podcast/current-affairs/what-are-carbon-credits-122033100080_1.html