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Emissions trading is a method that is being used to control the amount of pollution being released into the atmosphere by providing an economic incentive for reducing the amount of pollution being generated. Excessive greenhouse gasses, carbon dioxide in particular, which comes from pollution in the atmosphere is a major factor in global warming. To make a measure of the amount of greenhouse gasses being released, a carbon credit is set to be a certain amount, usually a ton, of emissions. A central authority is the one who sets the limits to the companies by assigning a certain amount of credits to each company. Each company, in turn, is responsible for maintaining their emissions under their credit limit. Those companies that are able to stay under their limits are given the opportunity to sell their excess credits for monetary gain. There is no restriction on whether the sales are being done privately or in the international markets. Likewise, companies that are going over their set limits may purchase those extra credits to increase their carbon credit limit. The goal for this is that hopefully, companies will continue to invest in technologies that reduce their release of pollution. Companies under their goal will want to stay under their goal to continue selling credits. Companies over their goal, on the other hand, will want to lessen or even remove their reliance on the purchase of credits, perhaps even to sell their own credits in the future. In the end, it is believed that the threat of global warming can be lessened with the institution of these changes.
Countries are finding ways to earn carbon credits not only to reduce the amount of greenhouse gasses produced, but also to open up access to a new market, . A push toward biofuels is one method being used to attain carbon credits. Vehicles using biofuels release a significantly smaller amount of carbon emissions than similar vehicles that burn the more common fossil fuels. Because of this, biofuel production is a start for countries to earn carbon credits. Utilizing other renewable energy sources such as solar and wind power will also earn carbon credits, also referred to as CO2 credits, for the country. Some places have even considered changing the pace at which forests are being cut down and then replanted for lumber. Although it affects the amount of greenhouse gasses in the environment far less than exhaust from vehicles, forests still play an important part in earning carbon credits. Trees naturally absorb the carbon dioxide from the air, trapping it within itself, thereby lowering the amount of carbon dioxide left in the atmosphere to create the greenhouse effect. With all of the changes in effect, countries are finding that they now have extra carbon credits available. Having extra credits will allow countries to trade this new commodity to other countries to earn additional income. Like any other commodity that is available for trade, the carbon credit value fluctuates with the current supplies and demands of the product. As the countries make their trend toward lowering their carbon emissions, there will soon be no demand on carbon credits, unless as progress is being made, the carbon credit limit is also being lowered.
With the threat of global warming on the horizon, many are trying to find ways to lessen the impact that industry has upon the atmosphere. One way to attempt this change is to limit how much greenhouse gas, carbon dioxide in particular, a facility may release into the atmosphere. Each facility is then assigned a limit, otherwise known as carbon credits, that is determined by the size of the facilities and what is produced at the facilities. With limits being placed upon the amount of carbon dioxide gas a facility may release to the atmosphere, there will be some companies that will be unable to achieve the goal of staying under the limit. Since the ultimate goal for using carbon credits is for the entire world as a whole to lower their emissions of greenhouse gasses not just individual facilities, these companies will have the opportunity to adjust their actual limit with the purchase of carbon credits. These extra credits come from companies who are able to stay under their assigned carbon credit limit. Like any other commodity, carbon credits have a price per unit. New companies have even shown up to sell carbon credits to individual people so they can offset their own carbon credit usage. Al Gore, known for his work on informing others about the dangers of global warming, purchases carbon credits himself to serve as an example. These Al Gore carbon credits are then used to cover the amount of carbon dioxide released by the vehicles that he uses during his travels over the world.
With the rise of environmental awareness, more and more companies are working to reduce the amount of greenhouse gasses they release to the atmosphere, namely carbon dioxide. As a way to gauge the amount of these gasses that a company produces, each company is assigned a carbon emission limit. This limit is based upon the size of the facilities and what is produced at the facilities, as well as the history of emissions from the facilities. Essentially, this limit is the amount of carbon emission credits that a company has available for a given year. Using these credits as an incentive, companies that produce a lower amount of greenhouse gas than their limit may sell their left-over credits to other companies that are going over their own limit. Knowing that money can be made by selling their carbon emission credits to other companies pushes some companies to strive to greatly reduce much of the pollution they produce. Using energy efficient devices, such as using florescent lighting instead of incandescent lighting is one method to lower the amount of credits used. Making use of renewable energy sources, such as solar, wind, and even water power, is a second method. Companies that make use of their land to plant trees can also gain extra credits to sell to other companies. Trees in general absorb much more carbon dioxide than grass and small plants. Therefore, by going green, companies can use the sale of their extra credits to expand the business giving them even more opportunities for growth.
|Jennifer Mathes, Ph.D.|