Carbon credits and carbon trading are hot topics for debates and conventions on environmental issues, but a majority of us are not completely acquainted with these concepts. In the carbon trading system, commercial entities have to adhere to the emission caps of greenhouse gases as fixed by the Kyoto Protocol that governs and allocates these caps across nations to encourage controlled emissions or discourage carbon-intensive methods of operating industries.
Carbon credits are allocated to industries and governments throughout the world, which allows the owner to discharge a limited quantity of CO2 and other greenhouse gases into the atmosphere. One carbon credit amounts to one ton of carbon dioxide released in the environment. This implies companies and industrial units can engage in buying and selling of carbon credits based on their respective levels of emissions, thereby keeping the whole world's emission level within prescribed limits.
The major advantage of carbon trading is that it results in a situation where companies tending to exceed their emission allowances have to make payment of a substantial sum to do so, as they have to buy carbon credits from the world market. However, both entities selling and purchasing the credits can be found in the carbon credits world market. Hence the overall economy does not lose out at all, while companies with environment friendly mechanisms make more profits. This makes organizations shift away from the carbon centric methods of manufacturing, and so the emission levels decrease.
A company - large or small- that timely opts for a more eco-friendly and greener approach to operating business is certain to be rewarded as carbon credits are transacted on the open bourses and can be bought or sold by anyone. This trading strategy ensures instant and great rewards for companies with a low emission history. Moreover, with countries and their administration engaged with the idea, national governments on their part would have to ask local industries to decrease emissions, and therefore these governments would be taken away from their traditional stance of indifference towards environmental issues.
Carbon tax is another alternative that may be implemented, in which organizations responsible for pollution are penalized but eco-friendly organizations are not rewarded for low emissions. The effectiveness of such systems is quite debatable and issue of contention at times.
In a short span since its adoption, carbon trading has proven to be the most appropriate means to tackle the problem of carbon emissions. The carbon trading market has seen tremendous growth in the past few years, which most people see as proof that the system works effectively. - 2364
Carbon credits are allocated to industries and governments throughout the world, which allows the owner to discharge a limited quantity of CO2 and other greenhouse gases into the atmosphere. One carbon credit amounts to one ton of carbon dioxide released in the environment. This implies companies and industrial units can engage in buying and selling of carbon credits based on their respective levels of emissions, thereby keeping the whole world's emission level within prescribed limits.
The major advantage of carbon trading is that it results in a situation where companies tending to exceed their emission allowances have to make payment of a substantial sum to do so, as they have to buy carbon credits from the world market. However, both entities selling and purchasing the credits can be found in the carbon credits world market. Hence the overall economy does not lose out at all, while companies with environment friendly mechanisms make more profits. This makes organizations shift away from the carbon centric methods of manufacturing, and so the emission levels decrease.
A company - large or small- that timely opts for a more eco-friendly and greener approach to operating business is certain to be rewarded as carbon credits are transacted on the open bourses and can be bought or sold by anyone. This trading strategy ensures instant and great rewards for companies with a low emission history. Moreover, with countries and their administration engaged with the idea, national governments on their part would have to ask local industries to decrease emissions, and therefore these governments would be taken away from their traditional stance of indifference towards environmental issues.
Carbon tax is another alternative that may be implemented, in which organizations responsible for pollution are penalized but eco-friendly organizations are not rewarded for low emissions. The effectiveness of such systems is quite debatable and issue of contention at times.
In a short span since its adoption, carbon trading has proven to be the most appropriate means to tackle the problem of carbon emissions. The carbon trading market has seen tremendous growth in the past few years, which most people see as proof that the system works effectively. - 2364
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