Carbon trading is the market that allows companies to buy and sell so-called carbon credits, or rather the right to emit a certain amount of CO2. The goal of carbon trading, which dates back to the Kyoto Protocol and began in 2005, is to gradually reduce total emissions.
Carbon credits, also known as carbon offsets, are certificates that represent a ton of carbon dioxide or other greenhouse gases that have been reduced or removed from the atmosphere. These are purchased by companies in order to help offset the CO2 emissions that they produce. These purchases fund projects by other companies which reduce or absorb carbon emissions. This allows products whose total carbon footprint cannot be eliminated through further interventions in their production process, to be declared carbon-neutral.