Industrial and personal use of fossil fuels to generate energy has been widespread for several decades around the world. However, these fossil fuels release greenhouse gases such as CO2 and methane, which cause a lot of harm to the environment. Increasing emissions have led to a very high level of concentration of these gases in the atmosphere, resulting in global warming, which is threatening life on earth.
With the objective of decreasing the emissions and protecting the environment, the concept of carbon credits was introduced. More than 170 nations had reached consensus through the Kyoto protocol to fix limits on greenhouse gas emissions across the globe in a pact back in 2005. The country’s administration then utilizes the agreed limits and assigns quotas to manufacturing units, identifying the quantity of emissions they are permitted to make.
Through the carbon credits concept, the government grants incentives to manufacturing entities that keep emissions below the quota, and punishes those who are not able to do so. According to its definition, one carbon credit is equivalent to one ton of CO2 emitted in the atmosphere. In this novel scheme, manufacturing units or firms that emit greenhouse gases less than the prescribed quota can sell carbon credits of an amount equivalent to the difference, on the other hand those units that emit more will have to purchase a corresponding amount of carbon credits from the market.
Such international trading of carbon credits is aimed at regulating the overall quantity of emissions of greenhouse gases in the atmosphere by encouraging lesser emissions by industrial units. The trading of carbon credits has made firms make good their emissions, and it now has a direct impact on the firm’s financial statement. Companies have thus woken up to the need of cutting down their emissions and find environment friendly industrial options.
Carbon offset credit is another financial solution to reduce greenhouse gas emission, which works on a similar strategy. A carbon offset credit is equal to reduction of one metric ton of carbon dioxide or corresponding greenhouse gas in the atmosphere. Making use of cleaner and renewable energy sources like wind and solar energy helps to achieve this important decrease.
A carbon offset is bought by companies or other organizations to balance the emissions that are above their prescribed quotas as per the rules. Carbon offset is open for governments, organizations and even an individual who can offset their carbon footprint through it. This helps in encouraging and funding decrease in emissions and furthering eco-friendly efforts of generation of energy.
Discover more about Carbon Credits and Carbon Offset and get a deeper understanding on how you can help in saving the environment.
Tags: Business, carbon emission, carbon offset, carbon trading, Environment, marketing