Carbon credits and carbon trading are hot topics for debates and conventions on environmental matters, but most of us are not fully acquainted with these concepts. In the carbon trading system, industries have to stick to the emission caps of greenhouse gases as set by the Kyoto Protocol that governs and allocates these caps across nations to encourage controlled emissions or discourage carbon-intensive methods of running industries.
Governments and industries in several countries are allowed a particular number of carbon credits, providing them with the right to release a limited quantity of carbon dioxide and other greenhouse gases into the air. One carbon credit is equal to one ton of carbon dioxide discharge. This implies companies and industries can indulge in purchasing and selling of carbon credits based on their respective levels of emissions, thereby maintaining the entire world's emission rate within safe limits.
The major advantage of carbon trading is that it leads to a situation where companies tending to exceed their emission limits have to make payment of a significant amount to do so, as they have to purchase carbon credits from the 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. Hence the balance in world economy is maintained, while entities with low emission records make profits. This motivates companies to adopt eco-friendly alternatives, and gradually the global rate of greenhouse gas emissions comes down.
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 system makes sure 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 force local companies to decrease emissions, and thus these governments would be taken away from their conventional stance of indifference towards environmental issues.
However, there are some people who advocate other systems like carbon tax, which instead of incentivising the greener companies, will penalize those who have excessive emissions. There is a lot of speculation over the efficacy of such systems.
In a short period since its inception, carbon trading has proven to be the best method to tackle the issue of carbon emissions. The carbon trading market has seen tremendous growth in the last few years, which most people perceive as evidence that the system works quite well.
Governments and industries in several countries are allowed a particular number of carbon credits, providing them with the right to release a limited quantity of carbon dioxide and other greenhouse gases into the air. One carbon credit is equal to one ton of carbon dioxide discharge. This implies companies and industries can indulge in purchasing and selling of carbon credits based on their respective levels of emissions, thereby maintaining the entire world's emission rate within safe limits.
The major advantage of carbon trading is that it leads to a situation where companies tending to exceed their emission limits have to make payment of a significant amount to do so, as they have to purchase carbon credits from the 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. Hence the balance in world economy is maintained, while entities with low emission records make profits. This motivates companies to adopt eco-friendly alternatives, and gradually the global rate of greenhouse gas emissions comes down.
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 system makes sure 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 force local companies to decrease emissions, and thus these governments would be taken away from their conventional stance of indifference towards environmental issues.
However, there are some people who advocate other systems like carbon tax, which instead of incentivising the greener companies, will penalize those who have excessive emissions. There is a lot of speculation over the efficacy of such systems.
In a short period since its inception, carbon trading has proven to be the best method to tackle the issue of carbon emissions. The carbon trading market has seen tremendous growth in the last few years, which most people perceive as evidence that the system works quite well.
About the Author:
Discover more about carbon credits and carbon offset and get a deeper understanding on how you can help in saving the environment. Visit the Uber Article Directory to get a totally unique version of this article for reprint.
Articles
Aucun commentaire:
Enregistrer un commentaire