Fossil fuels have been extensively used as the basic source of energy for a lot of decades now in all kinds of industries as well as for individual use. However, these fossil fuels emit greenhouse gases such as CO2 and methane, which cause a lot of harm to the environment. Increasing concentration of these greenhouse gases in the atmosphere is causing the phenomenon of global warming, with serious repercussions for the planet.
With the objective of decreasing the emissions and protecting the environment, the idea of carbon credits was introduced. Through the well known Kyoto protocol, an agreement reached by over 170 nations, it was decided to put limits on emissions of greenhouse gases by every participating country. The set limits are then used by the nation's government for allocating quotas to different industrial and commercial entities of how much emission they are allowed.
In the carbon credits scheme, the manufacturing units that emit pollutants more than the allocated quota are penalized while those releasing less are rewarded. By definition, one carbon credit amounts to one ton of CO2 emitted in the atmosphere. In this novel system, manufacturing units or firms that release greenhouse gases less than the prescribed quota can sell carbon credits of an amount corresponding to the difference, while those units that emit above the limit will have to purchase a corresponding amount of carbon credits from the market.
International trading of carbon credits stresses on minimization of greenhouse emissions by its 'reward and penalty' strategy, and leads to a cleaner environment. Companies are forced to pay for leaving behind their carbon footprints under the carbon credits policy, and this now has a huge impact on their financial results. Companies have thus realised the need of cutting down their emissions and look for environment friendly industrial options.
Carbon offset credit is another financial scheme to control greenhouse gas emission, which works on a similar strategy. One carbon offset represents the decrease of one metric ton of CO2 or a corresponding quantity in other greenhouse gases. Making use of greener and renewable energy sources like wind and solar energy helps to achieve this crucial decrease.
A carbon offset is bought by firms or other organizations to balance the emissions that are above their allocated quotas as per the rules. Carbon offset is open for governments, organizations and even the common man who can offset their carbon footprint through it. Their purchase helps in financing the decrease of greenhouse gases and encouraging eco-friendly methods of energy generation.
With the objective of decreasing the emissions and protecting the environment, the idea of carbon credits was introduced. Through the well known Kyoto protocol, an agreement reached by over 170 nations, it was decided to put limits on emissions of greenhouse gases by every participating country. The set limits are then used by the nation's government for allocating quotas to different industrial and commercial entities of how much emission they are allowed.
In the carbon credits scheme, the manufacturing units that emit pollutants more than the allocated quota are penalized while those releasing less are rewarded. By definition, one carbon credit amounts to one ton of CO2 emitted in the atmosphere. In this novel system, manufacturing units or firms that release greenhouse gases less than the prescribed quota can sell carbon credits of an amount corresponding to the difference, while those units that emit above the limit will have to purchase a corresponding amount of carbon credits from the market.
International trading of carbon credits stresses on minimization of greenhouse emissions by its 'reward and penalty' strategy, and leads to a cleaner environment. Companies are forced to pay for leaving behind their carbon footprints under the carbon credits policy, and this now has a huge impact on their financial results. Companies have thus realised the need of cutting down their emissions and look for environment friendly industrial options.
Carbon offset credit is another financial scheme to control greenhouse gas emission, which works on a similar strategy. One carbon offset represents the decrease of one metric ton of CO2 or a corresponding quantity in other greenhouse gases. Making use of greener and renewable energy sources like wind and solar energy helps to achieve this crucial decrease.
A carbon offset is bought by firms or other organizations to balance the emissions that are above their allocated quotas as per the rules. Carbon offset is open for governments, organizations and even the common man who can offset their carbon footprint through it. Their purchase helps in financing the decrease of greenhouse gases and encouraging eco-friendly methods of energy generation.
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