Carbon Credits - New Developments And Trends In Ghana

Carbon Credits represent a tradable permit for an entity's right to emit one metric ton of carbon dioxide or other greenhouse gases into the atmosphere.¹ Essentially, a buyer compensates for their carbon emissions by supporting projects that reduce or offset an equivalent amount of carbon elsewhere.² The concept was developed under Article 6 of the Paris Agreement, with the aim of reaching net zero³ climate targets.⁴

Carbon credits promote environmental responsibility and contribute to overall efforts to mitigate climate change by ensuring that corporation are aware of their carbon footprints, and are making significant efforts to reduce same.⁵ For example, where a company granted a credit of 1000 tons of carbon dioxide equivalent (CO2e) annually, successfully emits only 500 tons of CO2e within the given year, it will have an excess of 500 tons in carbon credits, which it can either sell or transfer to another company on the carbon market.⁶