With the levels of CO2 and other greenhouse gases in the atmosphere reaching dangerous levels, there has been rising worldwide concern about the immense damage they cause to the environment. Instruments like carbon credits and carbon offset were introduced in order to improve the scenario by encouraging companies which are more eco friendly in the way they run their operations.

The carbon credits system is quite recent. A single carbon credit provides the permission for emission of one tonne of CO2 or a similar amount of some other greenhouse gas into the atmosphere. The maximum amount of emissions in the world can be controlled through the carbon trading system in which carbon credits can be sold and purchased.

Every company is allotted a fixed amount of carbon credits that represent the amount of carbon dioxide and other greenhouse gases that it can release. Carbon trading is used when the company’s emissions go beyond its quota of carbon credits, requiring it to purchase credits from others who have opted for more ecological ways of operating and thus have carbon credits to sell.

Thus, the worldwide carbon emissions remain within the agreed limits, and companies are encouraged to adopt more environment friendly manufacturing practices in order to reduce emissions so that they do not need to spend on buying carbon credits. The system also incentivizes green firms and encourages them to opt for greener means in order to increase their profits through selling their carbon credits in the international market.

Carbon credits can be purchased like any other product because they are offered for sale in an open market and there are many agencies that trade in them. In fact, even if you are not representing a company, you can opt to purchase carbon credits so as to reduce your carbon footprint. The amount raised through your investment is channelized for financing ecological projects running in different corners of the globe that contribute to neutralizing your emissions.

Tags: Business, carbon credits, carbon offset, carbon trading

This entry was posted on Saturday, October 10th, 2009 at 8:03 am and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.