Carbon Credit: “Go Red or Go Green”
Our earth is undoubtedly warming. This warming is largely the result of emissions of carbon dioxide and other Greenhouse Gases (GHG’s) from human activities including industrial processes, fossil fuel combustion, and changes in land use, such as deforestation etc. Addressing climate change is not a simple task. To protect ourselves, our economy, and our land from the adverse effects of climate change, we must reduce emissions of carbon dioxide and other greenhouse gases. To achieve this goal the concept of Carbon Credit has come into vogue.
Climate Change
What is Carbon Credit?
1. Carbon credits are certificates issued to countries that reduce their emission of GHG (greenhouse gases) which causes global warming.
2. Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one tonne of carbon dioxide reduction.
3. Under IET (International Emissions Trading) mechanism, countries can trade in the international carbon credit market. Countries with surplus credits can sell the same to countries with quantified emission limitation and reduction commitments under the Kyoto Protocol.
4. Developed countries that have exceeded the levels can either cut down emissions, or borrow or buy carbon credits from developing countries.
How it Works?
CARBON CREDITS are generated by enterprises in the developing world that shift to cleaner technologies and thereby save on energy consumption, consequently reducing their greenhouse gas emissions. For each tonne of carbon dioxide (the major Green house gases) emission avoided, the entity can get a carbon emission certificate which they can sell either immediately or through a futures market, just like any other commodity.
The certificates are sold to entities in rich countries, like power utilities, who have emission reduction targets to achieve and find it cheaper to buy 'offsetting' certificates rather than do a clean-up in their own backyard. This trade is carried out under a UN-mandated international convention on climate change to help rich countries reduce their emissions.
What are the needs for Credit Carbon?
Ø Greenhouse gases (GHG) are components of the atmosphere that contribute to the greenhouse effect.
Ø Some greenhouse gases occur naturally in the atmosphere, while others are the result from human activities such as burning of fossil fuels such as coal.
Ø GHG include water vapor, carbon dioxide, methane, nitrous oxide, and ozone.
Ø Carbon exists in the Earth's atmosphere primarily as the gas carbon dioxide (CO2). The overall atmospheric concentration of these greenhouse gases has been increasing in recent decades, contributing to global warming.
How Carbon Credit deals with the Carbon emission reduction?
? The credit carbon mechanism was formalized in the Kyoto protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Marrakesh Accords.
? The main aim of this agreement is to reduce the carbon emission in the global atmosphere to balance the natural environment.
Kyoto protocol
Kyoto Protocol is an agreement made under the United Nations Framework Convention on Climate Change (UNFCCC) The Kyoto Protocol is only binding ‘industrialized’ or ‘developed‘countries. The protocol commits developed countries to specific targets for reducing their green house emissions & each country has a prescribed number of 'emission units' which make up the target emission. The Kyoto Protocol provides mechanisms for countries to meet their emission targets.
Kyoto Protocol Mechanisms:
International Emission Trading (IET)
? Emissions trading (ET) is a mechanism that enables countries with legally binding emission targets to buy and sell emissions allowances among themselves.
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