A carbon credit is a tradeable permit representing the right to emit one tonne of carbon dioxide or equivalent greenhouse gases. Credits are created through regulatory systems (like cap and trade) or voluntary markets. Companies that reduce emissions below their allowances can sell surplus credits to others who need them. Carbon credits create financial incentives for emission reductions by putting a price on carbon. Critics debate whether credits allow heavy emitters to 'buy their way out' rather than actually reducing emissions. Quality and verification of credits—ensuring they represent real, additional emission reductions—is crucial to the integrity of carbon markets.