Carbon credits:-
What are carbon credits?
It is a term(type of currency) used to control carbon emission.
one carbon credit is equal to one tonne of carbon it is denoted as co2e(carbon equivalent)
The burning of fossil fuel is a major cause of greenhouse gases emissions (GHG'S). The types of greenhouse gases are CO2, CO, NOx, Methane (CH4) & Hydro- Fluro Carbons (HFC'S).
These are the gases that are responsible for global warming.
Generally, the main source of greenhouse gases emission is industries.
Industries like Power, Steel, Cement, Textile, Fertilizer are based on fossil fuels like Coal, Oil, Natural gas. Apart from this humans is using millions of vehicle all over the world which also plays a role in greenhouse gas emission.
The world mean temperature is already at a point of 2°C increase, scientists have predicted that when the temperature will exceed the height of 4.4°C no life will be possible on the earth.
Climate scientists of UN panel have said that temperature rise going beyond 2°C will let a high impact on climate leading to vast disaster. E.G. It may melt snow from polar regions, Increase Sea level, cause the disappearance of islands from the globe, etc. Hence proper attention should be given.
Hence to face this challenge,
G8 Submit (Group of 8 inter-governmental political fora), agreed not to exceed 2°C rises in temperature. Pre-industrial level members also agreed upon it. It was stated as a major economic forum as 'L' which was happened in Aquila located in Italy, in July 2009.
After this acceptance and increase in awareness of the need for controlling emission and saving the earth from several climatic disasters, the concept of carbon credits came into existence.
This type of mechanism was formulated in the international agreement done between 170+ countries. Which was held in Kyoto located in Japan in 2004. This agreement was named as Kyoto protocol. According to this protocol the 'quota' and 'caps' of the maximum amount of greenhouse gases were fixed for development and developing countries. In which carbon emission was managed, India and China decided to stay out of this protocol because of inequality of quota based on 450 parts per million by volume between developing and developed countries.
The USA is the maximum contributor to greenhouse gases.
Kyoto meeting has decided that every country producing CO2 must contain CO2 by tree plantation or should go through another process that will absorb CO2, or reduce CO2 emission.
If the country emitting more amount of CO2 than their level of absorption they should buy 'Absorption Ability' of CO2 from other countries.
By observing it the carbon credits have become a new currency that can be traded in the international market.
Based on Kyoto Protocol, each Country can set Quotas or Caps on the emission of installations run by local business, other organisations, houses. These are termed, Operators.
According to the Kyoto protocol if the country is having a shortage of tonnes of CO2 absorption ability then they should buy it from other countries or find a way to create technology that will try to reduce carbon emission.
The cost of each carbon credit is ranged between 10-40USD.
There are possibilities in variation in cost according to the demand of CO2 emission, this demand may be slow downed by upgrading precise technologies.
The carbon credits rate also fluctuates according to fluctuation in the price of oil in the international market.
There are several long term plans to reduce CO2 emission which are as follow:
1}use of efficient technology for using fuels.
2} Forest's should be left to stand.
3} Plantation of new trees as many as possible.
4} use the latest technology for absorption of CO2 emissions.
5}Make efficient power generation by properly using fossil fuels.
6}Try to generate clean energy in a wide amount.
Effects of Carbon credits:-
By allowing the trade of carbon credits for buying and selling it in the international market, the operator is trying to find the most cost-effective way to reduce emission.
The ways might be,
1) Purchasing emission from another operator who has an excess amount of carbon credits.
2) Investing money in the latest clean energy technologies instead of buying carbon credits.
Money used in buying carbon credits can ultimately be used for giving grants to several technologies which are used for controlling carbon emission.
According to the Kyoto protocol, under Clean Development Mechanism (CDM), a developed country can sponsor clean energy projects to developing countries.
The cost of carbon credits is rising!
An increase in the cost of carbon credits is important.
Why?
According to economist professor William Nordhous of Yale University, USA.
The cost is of carbon credits is needed to be raised because,
1) producer of goods will try to reduce CO2 emissions by using fossil fuels and also try to switch toward clean natural energy instead of using fossil fuels.
2) Industrialists will provide incentives to scientists for developing less carbon emission technology instead of buying carbon credits.
Carbon credits actively have been imposed on organisation and industries of various countries to save the earth from global warming by emission control.
Informative.
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