Carbon Credits Explained WHAT IS A CARBON CREDIT? A Carbon Credit is created when the equivalent of one metric tonne of carbon dioxide is prevented from entering the atmosphere. Internationally known as Certified Emission Reductions, Emission Reduction Units, or Verified Emission Reductions, each carbon credit has a monetary value depending on the type and origin of the emission reduction produced. WHAT ARE THEY WORTH? Each carbon credit can be traded on the open market, with the current spot rates on the European Union's Emission Trading Scheme averaging 25 Euros per tonne during 2008, (EUA DEC '08). With the onset of the current global financial crisis and the reduction in the price of oil, the emissions market has been affected. Please see the current spot rate as indicated by the graph to the right. As the economy begins to recover and the price of oil rises, the value of carbon credits will also increase WHO BUYS CARBON CREDITS? Carbon credits are mostly purchased by governments & corporations who have a legal or moral duty to reduce their carbon footprint. A growing number of individuals are also purchasing sufficient personal carbon credits to claim a `carbon neutral' lifestyle. Although these organizations could implement change in their home country by sponsoring emission reduction projects locally, the economic benefits of deploying an equivalent emissions reduction scheme in the developing world for a fraction of the cost is what drives the international trade in `carbon offsets'. EFTA01221483