Carbon credits

Carbon credits, also known as carbon allowances, act like emission permits. When a company buys carbon credits, usually from the government, they get a permit to emit a ton of carbon dioxide. With carbon credits, carbon revenue flows vertically from companies to regulators, although companies that eventually get excess credits can sell them to other companies.

Carbon offset

Carbon offsets flow horizontally, trading carbon revenue between companies. When a company removes one unit of carbon from the atmosphere as part of its normal business activities, they can generate carbon offsets. Other companies can then buy carbon offsets to reduce their own carbon footprint.

Picture source：https://www.ndc.gov.tw/