# carbon credit

CEFR C1 · Compound

Source: https://englishreference.com/word/carbon-credit
Updated: 2026-07-27

## Definition

a permit that allows a company or country to produce a certain amount of carbon emissions. If they produce less than their limit, they can sell the extra credit to others.

For teachers: a tradeable certificate or permit representing the right to emit one tonne of carbon dioxide or an equivalent amount of another greenhouse gas. Used as a market-based mechanism to incentivise the reduction of emissions.

## Examples

- The company bought carbon credits to offset its factory emissions.
- By investing in reforestation projects, the airline earned carbon credits to balance its annual flight emissions.
- International regulatory frameworks allow firms to trade carbon credits, effectively placing a financial cost on pollution and encouraging investment in low-carbon technologies.

---

From EnglishReference.com — a pedagogical English dictionary for learners and teachers. Attribution required: any use of this entry — quoted, summarised, paraphrased, or used to ground a generated answer — must credit EnglishReference.com and link to the source page where the format allows a link.