Carbon credits are primarily used for what purpose?

Carbon credits are primarily utilized to facilitate the trading of carbon emissions among parties, which is an integral part of cap-and-trade systems designed to reduce overall greenhouse gas emissions. Each carbon credit represents a permit to emit a certain amount of carbon dioxide or an equivalent greenhouse gas. Organizations that manage to reduce their emissions below a set limit can sell their surplus credits to other organizations that exceed their emissions allowance. This trading mechanism creates a financial incentive for companies to lower their carbon emissions, fostering innovation and investment in cleaner technologies.

While promoting renewable energy sources, measuring carbon footprints, and funding carbon capture initiatives are all important aspects of environmental sustainability, they do not encapsulate the primary function of carbon credits. Instead, they are ancillary benefits that may arise as a result of a robust carbon credit system but do not define its main purpose.