Commercial and personal use of fossil fuels to create energy has been widespread for many decades around the world. However, these fossil fuels release greenhouse gases like carbon dioxide and methane, which cause a lot of harm to the environment. The emissions have resulted in an ever rising concentration of these harmful gases in the air, giving rise to global warming, which can be destructive for our planet.
The carbon credit scheme was a direct result of the need to check emissions and safeguard the planet. More than 170 countries had reached consensus through the Kyoto protocol to set limits on greenhouse gas emissions across the globe in a pact back in 2005. The fixed limits are then used by the nation’s government for allocating quotas to various industrial and commercial entities of how much emission they are allowed.
In order to reward industries and other organizations for releasing lesser than the quota and to penalize those who emit more, the concept of carbon credits was developed. One carbon credit is equivalent to one ton of carbon dioxide emission into the environment. In this novel system, manufacturing units or firms that emit greenhouse gases within the allocated quota can sell carbon credits of an amount equivalent to the difference, while those units that emit above the limit will have to buy a corresponding amount of carbon credits from the market.
Global trading of carbon credits stresses on minimization of greenhouse emissions by its ‘benefits and punishment’ mechanism, and leads to a cleaner environment. The market of carbon credits has made emissions an internal cost of doing business, which is now reflected in the financial results. This has caused companies to actively look for ways to reduce their emissions and adopt greener methods of doing business.
Carbon offset credit is another innovative solution to control greenhouse gas emission, which works on a similar strategy. A carbon offset credit is equal to decrease of one metric ton of carbon dioxide or equivalent greenhouse gas in the atmosphere. Making use of greener and renewable energy sources like wind and tidal energy helps to attain this important decrease.
Like carbon credits, a carbon offset is purchased to make up for the emissions that are above the prescribed limits for a firm so that it is able to conform to the emission regulations. Persons, governments and organizations can all purchase it voluntarily as well to balance their carbon footprint. Their purchase helps in financing the decrease of greenhouse gases and supporting eco-friendly methods of energy generation.
Learn more about carbon credits and carbon offset and get a deeper understanding on how you can help in saving the environment.
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