The Fundamentals Of Carbon Credits And Its Benefits
Written by Ronald Morgan on January 8th, 2010
The words carbon credits and carbon trading often come up in seminars and events on the perils of global warming, but these concepts are still alien to a lot of people. In the carbon trading system, commercial entities have to adhere to the emission caps of greenhouse gases as set by the Kyoto Protocol that governs and allots these caps across nations to encourage controlled emissions or discourage carbon-intensive methods of running industries.
National governments and industries are allotted fixed quantities of carbon credits to regulate their emission levels, and the credits certify the owner to release a restricted amount of CO2 and other gases into the air. One carbon credit is equivalent to the release of one ton of carbon dioxide. This basically means that high-emission entities can purchase carbon credits from low-emission entities, thereby maintaining the total global emissions within the prescribed cap.
The major benefit of carbon trading is that it results in a scenario where businesses tending to go beyond their emission allowances have to pay a substantial sum to do so, as they have to buy carbon credits from the world market. However, this is a quid pro quo trade where selling and buying of carbon credits are done simultaneously by low and high emission firms. Thus, the world economy stays stable, while organizations least polluting the environment profit financially. This encourages companies to fund green processes as well and eventually the net greenhouse gases emissions begin decreasing.
A firm – big or small- that timely opts for a cleaner and greener approach to doing business is sure to be rewarded as carbon credits are traded on the open bourses and can be purchased or sold by anyone. The trading system means that the benefits to greener organizations are immediate and substantial. Moreover, country-wise allocation of limits makes national governments more actively pressurize local businesses to decrease emissions. This in turn enhances the government\’s reputation and makes it affirmatively work towards environment conservation, something that is greatly efficacious in encouraging eco-friendly technologies.
Carbon tax is another option that may be advocated, in which organizations responsible for pollution are penalized but eco-friendly industries are not rewarded for low emissions. There is a lot of doubt over the effectiveness of such systems.
Till now no other system has been able to efficiently manage the problem of carbon emissions better than carbon trading. The carbon trading business has witnessed considerable growth in the past few years, and this evidences beyond doubt that the system is impactful.
Discover more about Carbon Credits and Carbon Trading to get a deeper understanding on how you can help in saving the environment.
This entry was posted on Friday, January 8th, 2010 at 8:01 am and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Tags: business, carbon credits, carbon emission, carbon trading, environment, Marketing
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