Fossil fuels have been used as the main source of energy for many decades now in all types of industries as well as for personal use. However, these fossil fuels release greenhouse gases such as carbon dioxide and methane, which cause a lot of harm to the environment. Increasing concentration of these greenhouse gases in the air is causing the phenomenon of global warming, with serious repercussions for the planet.
With an aim of reducing the emissions and safeguarding the planet, the idea of carbon credits was brought into existence. Through the famous Kyoto protocol, an agreement among more than 170 countries, it was decided to set limits on emissions of greenhouse gases by every member country. The country’s administration then uses the agreed limits and prescribes quotas to manufacturing units, identifying the quantity of emissions they are allowed to make.
In the carbon credits scheme, the manufacturing units that emit greenhouse gases more than the allocated quota are punished while those producing less are rewarded. One carbon credit is equivalent to one ton of carbon dioxide released into the environment. In this novel scheme, manufacturing units or firms that release greenhouse gases within the prescribed quota can sell carbon credits of an amount equivalent to the difference, while those units that release above the limit will have to buy a corresponding amount of carbon credits from the market.
Such carbon credits trading encourage lesser emissions and thereby decrease uncontrolled emissions of greenhouse gases in the air. The trading of carbon credits has made emissions an intrinsic cost of running a company, which is now reflected in the financial results. This has caused companies to actively look for means to reduce their emissions and opt for cleaner methods of doing business.
Carbon offset credit is another innovative solution to control greenhouse gas emission, which follows a similar strategy. A carbon offset credit is equivalent to one metric ton of carbon dioxide or equivalent greenhouse gas reduction in the atmosphere. The decrease is mostly attained by using cleaner and renewable forms of energy such as tidal and wind energy.
A carbon offset is purchased by firms or other organizations to offset the emissions that are above their allocated quotas as per the defined regulations. Carbon offset is available to governments, companies and even the common man who can balance their carbon footprint through it. This helps in encouraging and financing reduction in emissions and advancing eco-friendly efforts of generation of energy.
Learn more about carbon credits and carbon trading and get a deeper understanding on how you can help in saving the environment. You can get a unique content version of this article from the Uber Article Directory.
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This post was written by Henry Scott on March 13, 2010
