Carbon Credits are a key component of national and international emissions trading schemes that have been implemented to enable countries to meet their emissions reduction target and thereby mitigate global warming. They provide a way to reduce GHG emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes between trading partners and around the world. Two major emission trading markets are the compliance-driven CDM Market and the Voluntary Market where credits that are issued under Verified Carbon Standard and Gold Standard, amongst others, are traded.

The compliance-driven CDM standard and the voluntary standard (viz., VCS and GS) have well- defined procedures to ensure the environmental integrity of projects that seek benefits under the carbon emissions trading regime.