Using a carbon credit exchange allows corporations to buy and sell carbon credits, in order to meet their environmental goals. Companies can buy credits to offset their emissions, or sell them to other companies to meet their obligations under the Kyoto Protocol. Carbon credits are traded over the counter. Carbon prices are normally quoted in Euros per tonne of carbon dioxide, or CO2e.

Carbon prices are dependent on the volume of credits that are traded. They can also be based on the geographic location of the project. Larger industrial projects are more likely to produce a large quantity of credits. The value of these credits is stabilized by government regulation.

carbon credit exchange projects can be created by a national government, or by an individual, group, or company. The project must meet legal requirements, and provide additional environmental benefits. These projects may also contribute to the UN Sustainable Development Goals (SDGs). Community-based projects usually generate more co-benefits than industrial projects.

Credits are issued by national governments and companies. These credits are not traded publicly, but they are available for use by corporations and individuals. There are two types of credits: removal and avoidance. The removal category is composed of projects that capture carbon from the air and store it. The avoidance category includes projects that reduce emissions or use natural processes to avoid emissions. Some carbon projects are community-based, meaning they are managed by local groups. These projects are usually localized and are more expensive to certify.

The Kyoto Protocol defined carbon units and established a value for these units. Companies can buy and sell excess carbon credits, thereby raising the cap on their emissions. Companies can also buy credits from projects that are in line with the United Nations Sustainable Development Goals (SDGs). Depending on the geography, the price for the carbon credits can vary. For example, the prices on the Chicago Climate Exchange, which operated from 2003 to 2010, were less than $5 per ton of carbon dioxide.

In addition to the Kyoto Protocol, several other international treaties have defined carbon units, including the Clean Development Mechanism (CDM) under the United Nations Framework Convention on Climate Change (UNFCCC). These treaties require companies to offset their emissions through projects in developing nations, in order to meet their obligations under them.

Many countries have taken action to reduce carbon emissions. One example is the Kyoto Protocol, which set an upper limit on the amount of carbon dioxide that companies can emit. However, there are companies that are unable to reduce their emissions. In these cases, they can purchase carbon credits to meet their obligations. These credits can be used to predict the amount of carbon reductions that a company will need to make in the future.

Carbon exchanges are used to support voluntary emissions reduction commitments, in order to help companies meet their emissions obligations under the Kyoto Protocol and the Paris Agreement. These exchanges also offer futures contracts, a financial instrument that enables investors to buy and sell a specific amount of carbon credits at a predetermined price. A futures contract is similar to a stock, and is often traded using leveraged trading. This leverage amplifies the impact of the initial investment.