Fossil fuels have been used as the primary source of energy for several decades now in all types of industries as well as for personal use. However, fossil fuels give out harmful greenhouse gases like methane and CO2, which cause great damage to the environment. High concentration of these greenhouse gases in the atmosphere is causing the phenomenon of global warming, with serious damage to the planet.
The concept of carbon credits was born out of our necessity to reduce the emissions and protect the planet. Over 170 nations had decided through the Kyoto protocol to fix limits on greenhouse gas emissions throughout the world in a pact back in 2005. The set limits are then utilized by the nation's government for allocating quotas to various industrial and commercial units of how much emission they are permitted.
Through the carbon credits concept, the market gives incentives to manufacturing units that keep emissions less than the quota, and punishes those who are not able to do so. According to its definition, one carbon credit is equivalent to a thousand kilos of CO2 emitted in the atmosphere. Under this concept, manufacturing companies have to buy a precise amount of carbon credits from the international trading market if their emissions are higher than the quota, while those companies that are under their emission quota can sell a corresponding amount of carbon credits.
Such global transactions in carbon credits is targeted at regulating the net quantity of emissions of greenhouse gases in the atmosphere by incentivizing lesser emissions by industrial units. The trading of carbon credits has made emissions an internal cost of doing business, which is now reflected in the financial results. Therefore firms are trying hard to keep their emissions within allowed limits and go for eco-friendly business options.
Another emission controlling financial scheme is the carbon offset credit, which serves a very similar objective. A carbon offset credit is equal to one metric ton of CO2 or equivalent greenhouse gas decrease in the air. This carbon dioxide decrease is obtained by making use of alternative and eco-friendly energy sources like tidal and wind energy.
Like carbon credits, a carbon offset is purchased to make up for the emissions that are above the prescribed limits for a company so that it is able to conform to the emission regulations. Carbon offset is open for governments, companies and even an individual who can balance their carbon footprint through it. Thus, they are able to support and fund the reduction in greenhouse gases and to encourage sustainable forms of energy generation.
The concept of carbon credits was born out of our necessity to reduce the emissions and protect the planet. Over 170 nations had decided through the Kyoto protocol to fix limits on greenhouse gas emissions throughout the world in a pact back in 2005. The set limits are then utilized by the nation's government for allocating quotas to various industrial and commercial units of how much emission they are permitted.
Through the carbon credits concept, the market gives incentives to manufacturing units that keep emissions less than the quota, and punishes those who are not able to do so. According to its definition, one carbon credit is equivalent to a thousand kilos of CO2 emitted in the atmosphere. Under this concept, manufacturing companies have to buy a precise amount of carbon credits from the international trading market if their emissions are higher than the quota, while those companies that are under their emission quota can sell a corresponding amount of carbon credits.
Such global transactions in carbon credits is targeted at regulating the net quantity of emissions of greenhouse gases in the atmosphere by incentivizing lesser emissions by industrial units. The trading of carbon credits has made emissions an internal cost of doing business, which is now reflected in the financial results. Therefore firms are trying hard to keep their emissions within allowed limits and go for eco-friendly business options.
Another emission controlling financial scheme is the carbon offset credit, which serves a very similar objective. A carbon offset credit is equal to one metric ton of CO2 or equivalent greenhouse gas decrease in the air. This carbon dioxide decrease is obtained by making use of alternative and eco-friendly energy sources like tidal and wind energy.
Like carbon credits, a carbon offset is purchased to make up for the emissions that are above the prescribed limits for a company so that it is able to conform to the emission regulations. Carbon offset is open for governments, companies and even an individual who can balance their carbon footprint through it. Thus, they are able to support and fund the reduction in greenhouse gases and to encourage sustainable forms of energy generation.
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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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