The answer is yes, pollution permits and carbon credits can reduce pollution, even though the idea of distributing permission to pollute and carbon credit can be morally debatable. Let’s explain this idea with one general principle: the Earth can tolerate a certain amount of pollution without being seriously harmed. After all, someone who has peed in a lake can’t be blamed to contaminate the whole water with his small amount of urine.
Dilution works the same way with gas when carbon dioxide gets absorbed by trees and other vegetation. In the context of using polluting permits and carbon credits, we would give every company on the planet a right to issue a certain amount of carbon dioxide. The total amount distributed would be an amount tolerable for the planet to ensure dilution of the carbon dioxide and consequently, avoid drastic environmental issues such as global warming. Therefore, polluting permits and carbon credits can help in reducing the amount of pollution on the planet, because we would be able to measure and control carbon emission.