Carbon credit concept – UGC NET Question

Carbon credits are units created when a project or activity demonstrably reduces or removes greenhouse gas emissions compared to a baseline. Each credit corresponds to a specific quantity, often one tonne of CO₂ equivalent, and can be traded and used for compliance in emissions trading schemes.

Option A:
Option A is incorrect because credits reward emission reductions, not fossil fuel production; fossil fuel subsidies undermine mitigation goals.

Option B:
Option B is correct as it emphasises both the tradable nature and the quantified emission reduction or removal that a credit represents.

Option C:
Option C is incorrect since a tax on renewable energy would discourage clean energy and is unrelated to the concept of credits.

Option D:
Option D is incorrect because credits exist within capped or regulated systems and do not give unlimited permission to pollute; entities must hold enough credits to match their emissions.