A. INTRODUCTION
Carbon markets are trading systems which operate on the
principle that greenhouse gas (GHG) emissions can be quantified,
traded, and offset. This market functions through two primary
mechanisms: (a) compliance systems, where companies must meet
regulatory emission reduction targets, and (b) voluntary markets,
where organisations voluntarily purchase carbon credits in order to
offset their emissions. A carbon credit is a tradable permit or
certificate which grants its holder the right to emit one tonne of
carbon dioxide (CO2) or an equivalent amount of another GHG.
According to the World Bank, one carbon credit represents one
metric ton of carbon dioxide equivalent (CO2e) that has been
reduced or removed from the atmosphere through various projects
such as renewable energy, reforestation, and energy efficiency
initiatives.1
