Carbon credits and carbon trading are common topics for debates and conventions on environmental matters, but most of us are not fully acquainted with these concepts. In the system of carbon trading, controls are imposed on greenhouse gas emissions under the Kyoto Protocol, and the prescribed emission limits are then distributed across countries, which have to control the greenhouse gas emissions from the different industries and business units operating within them.
Carbon credits are given to industrial units and governments throughout the world, which allows the owner to discharge a limited amount of CO2 and other greenhouse gases into the atmosphere. One carbon credit is equal to one thousand kilos of carbon dioxide discharge. This means that low-emission industries can sell carbon credits to high-emission corporations, thereby ensuring a cap on the greenhouse gas emissions in the world.
The key benefit of carbon trading is that it leads to a situation where companies tending to go beyond their emission limits have to pay a substantial amount to do so, as they have to purchase carbon credits from the market. However, both entities selling and buying the credits can be found in the carbon credits world market. Thus, the world economy remains balanced, while organizations least polluting the environment profit financially. This motivates companies to fund green processes as well and gradually the overall greenhouse gases emissions start decreasing.
By permitting the carbon credits to be traded freely on global exchanges, it can be ensured that irrespective of the size of the company, greener processes are always rewarded and can be conveniently monetized. This trading strategy makes sure immediate and substantial rewards for organizations with a low emission history. Moreover, country-wise allocation of caps makes national governments more actively encourage local businesses to decrease emissions. This in turn enhances the government's image and makes it affirmatively work towards environment protection, something that is immensely efficacious in encouraging green technologies.
However, there are some people who advocate other schemes like carbon tax, which rather than incentivising the greener companies, will penalize those who have extra emissions. There is much speculation over the effectiveness of such systems.
So far carbon trading has been most successful as a method and within a short period has been able to successfully address the problem of high carbon emissions. The carbon trading market has seen tremendous growth in the last few years, which most people perceive as proof that the system works effectively. - 29954
Carbon credits are given to industrial units and governments throughout the world, which allows the owner to discharge a limited amount of CO2 and other greenhouse gases into the atmosphere. One carbon credit is equal to one thousand kilos of carbon dioxide discharge. This means that low-emission industries can sell carbon credits to high-emission corporations, thereby ensuring a cap on the greenhouse gas emissions in the world.
The key benefit of carbon trading is that it leads to a situation where companies tending to go beyond their emission limits have to pay a substantial amount to do so, as they have to purchase carbon credits from the market. However, both entities selling and buying the credits can be found in the carbon credits world market. Thus, the world economy remains balanced, while organizations least polluting the environment profit financially. This motivates companies to fund green processes as well and gradually the overall greenhouse gases emissions start decreasing.
By permitting the carbon credits to be traded freely on global exchanges, it can be ensured that irrespective of the size of the company, greener processes are always rewarded and can be conveniently monetized. This trading strategy makes sure immediate and substantial rewards for organizations with a low emission history. Moreover, country-wise allocation of caps makes national governments more actively encourage local businesses to decrease emissions. This in turn enhances the government's image and makes it affirmatively work towards environment protection, something that is immensely efficacious in encouraging green technologies.
However, there are some people who advocate other schemes like carbon tax, which rather than incentivising the greener companies, will penalize those who have extra emissions. There is much speculation over the effectiveness of such systems.
So far carbon trading has been most successful as a method and within a short period has been able to successfully address the problem of high carbon emissions. The carbon trading market has seen tremendous growth in the last few years, which most people perceive as proof that the system works effectively. - 29954
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