Emissions trading programs have two key components: a limit (or cap) on pollution, and tradable allowances equal to the limit that authorize allowance holders to emit a specific quantity (e.g., one ton) of the pollutant. Emission credits, also called carbon credits or offset credits, are part of an economic strategy for lowering greenhouse gas emissions through carbon trading. In carbon trading, a government or other law-making body puts a price on carbon emissions and requires industries to pay for their emissions, creating an economic incentive to cut back on pollution . In a typical carbon emissions trading scheme, companies buy or sell carbon credits. One ton of carbon is usually equivalent to one carbon credit. Collectively, the trading companies must adhere to an overall total carbon emissions limit. Carbon credit trading is also referred to as a cap and trade transaction, carbon emission trading, CO 2 emissions trading, or simply emissions trading.