How Carbon Credits Contribute To A Cleaner Environment

Jan 24, 10 How Carbon Credits Contribute To A Cleaner Environment
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by Henry Scott

Worldwide, industrial and personal use of fossil fuels to generate energy has been widespread for several decades.  However, fossil fuels give off hazardous greenhouse gases like methane and carbon dioxide, which cause a lot of damage to the environment.  The emissions have led to an ever-increasing accumulation of these hazardous gases in the air, giving rise to global warming, which can be destructive for earth.

The idea of carbon credits came into existence out of our necessity to reduce the emissions and protect the environment.  The famous Kyoto protocol saw over 170 national representatives agreeing upon standard caps on greenhouse gas emissions in their respective nations in a phased manner.  The set limits are then utilized by the country’s government for allotting quotas to various industrial and
commercial entities of how much emission they are allowed.

Through the carbon credits system, the government gives incentives to manufacturing entities that create emissions below the quota, and punishes those who fail to do so.  According to its definition, one carbon credit is equivalent to one ton of CO2 emitted in the atmosphere.  In this innovative scheme, manufacturing units or companies that release greenhouse gases below the allocated quota can sell
carbon credits of an amount corresponding to the difference, while those units that emit above the limit will have to buy an equivalent amount of carbon credits from the market.

Such international transactions in carbon credits are aimed at regulating the net amount of emissions of greenhouse gases in the air by incentivizing lesser emissions by industrial units.  The market of carbon credits has made emissions an intrinsic cost of running a company, which is now also included in the financial results.  Therefore, companies are trying hard to maintain their emissions within allowed limits and adopt eco-friendly industrial alternatives.

Carbon offset credits is another innovative scheme to control greenhouse gas emission, which works on a similar strategy.  A carbon-offset credit is equivalent to one thousand kilograms of carbon dioxide or equivalent greenhouse gas reduction in the air.  This CO2 reduction is achieved by using renewable and eco-friendly forms of energy like tidal and wind energy.

A carbon offset is purchased in a similar way as carbon credits and are used to offset the excess emissions of that specific company over and above the allocated caps for compliance to the regulations.  Persons, governments, and organizations can all purchase them as well, in order to balance their carbon footprint.  Thus, they are able to assist and fund the reduction in greenhouse gases and to encourage cleaner techniques of energy production.

Discover more about carbon credits and carbon offsets and get a deeper understanding on how you can help in saving the environment.

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