Carbon trading is simply someone who emits carbon (be it a person or a company) pays someone who does something that reduces carbon emissions (energy efficiency, growing trees that store carbon, etc.). This is generally done through the Chicago Climate Exchange in the US. www.chicagoclimatex.com
A very comprehensive overview on carbon trading and the forest landowner was done by our colleagues at Warnell School of Forestry and Natural Resources. To learn more about the complexities of the process, explore their site at www.carbon.sref.info