A carbon credit is a permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases. One carbon credit typically represents one metric ton of carbon dioxide emissions. These credits are part of a market-based approach to reducing overall emissions, encouraging companies to lower their carbon footprint. Organizations can buy and sell carbon credits in a marketplace, creating a financial incentive to reduce emissions. If a company reduces its emissions below its allocated limit, it can sell its excess credits to others that need them. This system aims to promote environmental sustainability and combat climate change.