Carbon trading refers to the process of buying and selling permits to emit greenhouse gases. It is a key component of many countries' efforts to reduce their carbon emissions. There are a number of synonyms for carbon trading, including emissions trading, carbon offsetting, and greenhouse gas trading. Emissions trading is the broadest term and refers to any system where companies are allowed to buy and sell the right to emit pollutants. Carbon offsetting specifically refers to the practice of compensating for emissions by investing in renewable energy or other clean projects. Greenhouse gas trading is a more specific term that focuses on the trading of permits for the most common greenhouse gases, including carbon dioxide, methane, and nitrous oxide.