Carbon Trading, definition of

The sale and purchase of carbon credits or pollution permits through carbon markets.

The practice is designed to help control carbon dioxide emissions by placing a price on a ton of emitted CO2 and providing members of trading schemes with economic incentives to reduce the amount of pollution they produce.

The market is dominated by cap-and-trade schemes, such as the EU's emissions trading scheme, but carbon trading can also refer to the sale of carbon offsets from emission reduction projects.

In theory, carbon trading mechanisms mean that emission reductions are achieved at the lowest possible cost, as businesses will only purchase carbon credits - effectively paying someone else to cut emissions for them - if they can not deliver emission reductions at a lower cost themselves.

• Carbon trading is dead
  Carbon trading in the US is dead - the market set up to trade it is about to close down for lack of business.
• carbon trading does not reduce emissions
  Carbon trading will not do a thing to reduce carbon emissions and protect the environment; in fact it could end up doing the exact opposite as businesses use it as a way to create profit.
• WWF's Amazon carbon trading cash cow
  It appears the World Wildlife Fund could be on its way to securing up to $60 billion in carbon credits from 'saving' the Amazon - more like 'cashing in' on the Amazon if you ask me..