Carbon credits can be bought and sold to offset emissions a company can't eliminate by other means, such as switching to electric cars or replacing oil with renewable energy. The market is growing rapidly as companies and governments set carbon-reduction targets.

There are four main players in the carbon.credit exchange market: brokers, retailers, project developers and standards organisations. Brokers buy credits from suppliers, bundle them into portfolios and sell them to end buyers, usually with a commission. Retail traders buy credits directly from suppliers and then sell them to end buyers in large bundles, ranging from hundreds of equivalent tons of CO2 to thousands.

The market is dominated by companies and organizations that are trying to reduce their greenhouse gas emissions as they transition to a low-carbon economy. These include tech giants such as Apple and Google, airlines, the energy sector, and finance. Many businesses are already reducing their emissions, but some companies with older and less efficient operations produce more emissions than they can offset by other means. These organizations must buy a larger number of carbon credits each year to compensate for these emissions.

These companies may choose to offset their emissions by purchasing carbon credits from local and national producers, or from international suppliers. In some cases, they may also want to purchase credits from projects that provide additional co-benefits to the environment or meet United Nations Sustainable Development Goals (SDGs).

Standardization and a common taxonomy of credit attributes can help buyers and sellers find credits that match their needs more efficiently. In addition, better transparency and verification of emission reductions could help to improve the credibility of credits. A robust voluntary carbon market will allow companies to offset their emissions more efficiently and cost-effectively than they do today. But in order to do this, a market must be large, transparent and environmentally robust.

This market will need resilient and scalable infrastructure, including trade, post-trade, financing and data. It will also need to have market integrity assurance. One way to make this possible would be to establish a "core carbon principles" that define the minimum requirements for a credit's quality. Another would be to create an industry-wide collaboration on accepted uses of credit to offset emissions.

Third, the market must be equipped with advanced technology to ensure that emissions are accurately accounted and tracked. This will require digital infrastructure that will ensure that verified data is secure and that companies can easily access this information to track their emissions-reduction progress. Fourth, a voluntary market should have an independent and transparent certification process that checks and verifies projects to reduce emissions. This will ensure that companies are buying and selling the highest-quality credits.

It will also need a system for matching sellers and buyers, which can include common pricing data, a standard product for credit trading and a transparent credit retirement process. This will enable more buyers to get access to reliable, verifiable and fair prices for their carbon-reduction investments, thereby encouraging more suppliers to increase their supply of carbon credits.