World Wide Carbon: How Carbon Emissions Credits Work?


  • Environmental Protection: What are Carbon Emissions Credits and How Do They Work?
    When it comes to the green movement, there are many trends that seem to dominate the market. From environmentally friendly cleaning products to sustainable energy, one of the top conversations in this genre happen in relation to carbon emissions credits. Chances are that at some point or another this term has been floated in a conversation in which you were a part or in a flashing news story, but to hear the term and to understand it are two very different things. For that reason, the following delves deeper into what carbon emissions credits are, where they came from, and how they are playing a role in international markets.
  • What are the goals of Carbon Emissions Credits?
    During the early 1990s, governments around the world were being called to address environmental needs. Specifically, industrialized countries were taking a closer look at their carbon outputs and how they related to their environment. Carbon, as noted, can drastically impact the environmental status quo in a very negative way. Thus, the United Nations held the UN Framework Convention on Climate Change to address said concerns.
    During the convention, the carbon emissions credits were created in what was known as the Kyoto Protocol. At their essence, are meant to curb said damage to the atmosphere and incentivize protection of the environment. Reducing carbon emissions through credits, then, can greatly improve the atmosphere in which we live. A business or individual is given so many credits toward their use of greenhouse gases, capping the amount that they can output. Going over these emissions can see financial penalties. Those credits that go unused, however, can warrant impressive financial gains, as explained below.
  • What are the goals of Carbon Emissions Credits?
    At its base, the carbon emissions credits are meant to help reduce emissions of CO2 in the atmosphere. It is thought, as noted by CBS news, that by incentivizing businesses to reduce their carbon emissions through tax credits and financial incentives, the damaging effects of carbon in the atmosphere could be mitigated. The unique part of these credits is that they are not universal across the globe. For instance, because the United States did not sign the Kyoto Protocol, they are not bound by an international agreement to meet said international goals. Rather, the program is voluntary, though growing in nature.
  • Is There a Market?
    Carbon emissions credits are leading to a unique domestic and global market. Those businesses that want to sell their carbon emissions to others can do that. Large companies are choosing to cap—or may be required by their governments to do so—their carbon emissions at a lower level than incentivized to do and then sell said carbon emissions to other businesses. This means that larger corporations who want to produce more carbon while still staying within the incentivized range can do so by buying said credits on the market. This is a win-win for many businesses as it allows them to continue to grow while still, in essence, protecting the environment as the number of carbon emissions would remain the same. It is also possible for an individual or company that is set on improving their carbon footprint to purchase said carbon credits and then never actually emit the greenhouse gas.
  • The Counterpoint
    While carbon emissions credits are viewed positively by many in industry and in environmental sectors, there are those that take a more critical stance on the program. Quotas in many countries, as determined by the Kyoto Protocol, are seen by some to be negative to business growth. Certain businesses assert that the emissions of carbon and other greenhouse gases is necessary for business growth and, thus, are vital to industrialization. Others argue that those nations that, in the race to become the economic frontrunner globally, are choosing not to implement in any form are on track to essentially outgrow other nations in industrialized growth. Further, some countries are choosing to completely ignore the protocol and move forward, negating other countries efforts.

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