The rising levels of harmful greenhouse gases such as CO2 in the air has led to global concern over the highly destructive impact they have on the environment. Instruments like carbon credits and carbon offset were introduced in order to improve the scenario by incentivizing firms which are more environment friendly in the manner in which they conduct their business.
The carbon credits system is quite recent. One carbon credit allows the emission of one tonne of CO2 or a corresponding amount of some other greenhouse gas into the atmosphere. The maximum amount of emissions in the world can be controlled through the carbon trading system in which carbon credits can be sold and bought.
Every company is given an allowance of carbon credits, which governs the extent to which it can release CO2 and other greenhouse gases. Organizations opt for carbon trading if their emissions do not fall within their share of carbon credits in order to buy credits due to a legal compulsion. They buy them from organisations with lower emissions having extra carbon credits.
Hence, overall carbon emissions remain under the fixed levels, and companies are motivated to use greener ways of carrying out their work that lower the quantity of gases discharged by them and save them from additional expenditure to be made on carbon credits. The method also incentivizes green companies and motivates them to opt for greener means in order to increase their earnings through sale of their carbon credits in the international market.
Carbon credits can be bought just as any other product as they are offered for sale in an open market and there are various agencies that trade in them. You can purchase carbon credits even if you are not a part of any company in order to lower your own carbon footprint. The amount raised through your investment is routed to fund ecological projects running in various parts of the globe that contribute towards neutralizing your emissions.
The carbon credits system is quite recent. One carbon credit allows the emission of one tonne of CO2 or a corresponding amount of some other greenhouse gas into the atmosphere. The maximum amount of emissions in the world can be controlled through the carbon trading system in which carbon credits can be sold and bought.
Every company is given an allowance of carbon credits, which governs the extent to which it can release CO2 and other greenhouse gases. Organizations opt for carbon trading if their emissions do not fall within their share of carbon credits in order to buy credits due to a legal compulsion. They buy them from organisations with lower emissions having extra carbon credits.
Hence, overall carbon emissions remain under the fixed levels, and companies are motivated to use greener ways of carrying out their work that lower the quantity of gases discharged by them and save them from additional expenditure to be made on carbon credits. The method also incentivizes green companies and motivates them to opt for greener means in order to increase their earnings through sale of their carbon credits in the international market.
Carbon credits can be bought just as any other product as they are offered for sale in an open market and there are various agencies that trade in them. You can purchase carbon credits even if you are not a part of any company in order to lower your own carbon footprint. The amount raised through your investment is routed to fund ecological projects running in various parts of the globe that contribute towards neutralizing your emissions.
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