An international tradable certificate that shows that an industrial company or corporation has prevented the emission of one tonne of carbon dioxide or another form of greenhouse gas that is equivalent to one tonne of carbon dioxide from entering the atmosphere. Carbon credits are used as a way of mitigating the increase of greenhouse gases by capping the amount of gases that can be emitted. The intention is to encourage industries to seek ways of reducing the amount of emissions into the atmosphere. As commodities with a monetary value, they can be traded between partners and used as a way of lowering a company’s carbon footprint.

http://www.carbon-futures.org/index.php/carbon-credits-explained.html Official website of Carbon Futures, with an explanation of how carbon trading works.