CARBON CREDIT - A NEW MONETARY HARVEST
CARBON CREDIT - A NEW MONETARY HARVEST
Prologue: Carbon credit is the brain child of United Nations Framework Convention on Climate Change (UNFCCC) to bring about a clean environment in the already polluted world. The increasing awareness about the environmental degradation gave rise to the concept called Carbon Credit. The IPCC (Intergovernmental Panel on Climate Change) has observed that:
Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation, while noting that a tradable permit system is one of the policy instruments that has been shown to be environmentally effective in the industrial sector, as long as there are reasonable levels of predictability over the initial allocation mechanism and price. UNFCCC had formed a protocol called Kyoto protocol under which, the Clean Development Mechanism (CDM) has been formed. The CDM aims to control the Green House Gas Emissions (GHG) which pollutes environment. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Accords.
Carbon credits is a mechanism adopted by national and international governments to mitigate the effects of Green House Gases(GHGs). One Carbon Credit is equal to one ton of Carbon. Greenhouse Gases are capped and markets are used to regulate the emissions from the sources. The idea is to allow market mechanisms to drive industrial and commercial processes in the direction of low Greenhouse Gases(GHGs). These mitigation projects generate credits, which can be traded in the international markets for monetary benefits.
Under Kyoto Protocol, companies can earn Carbon Reduction Certificates [CER] through reduction in their Green House Gas Emissions by shifting to
Prologue: Carbon credit is the brain child of United Nations Framework Convention on Climate Change (UNFCCC) to bring about a clean environment in the already polluted world. The increasing awareness about the environmental degradation gave rise to the concept called Carbon Credit. The IPCC (Intergovernmental Panel on Climate Change) has observed that:
Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation, while noting that a tradable permit system is one of the policy instruments that has been shown to be environmentally effective in the industrial sector, as long as there are reasonable levels of predictability over the initial allocation mechanism and price. UNFCCC had formed a protocol called Kyoto protocol under which, the Clean Development Mechanism (CDM) has been formed. The CDM aims to control the Green House Gas Emissions (GHG) which pollutes environment. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Accords.
Carbon credits is a mechanism adopted by national and international governments to mitigate the effects of Green House Gases(GHGs). One Carbon Credit is equal to one ton of Carbon. Greenhouse Gases are capped and markets are used to regulate the emissions from the sources. The idea is to allow market mechanisms to drive industrial and commercial processes in the direction of low Greenhouse Gases(GHGs). These mitigation projects generate credits, which can be traded in the international markets for monetary benefits.
Under Kyoto Protocol, companies can earn Carbon Reduction Certificates [CER] through reduction in their Green House Gas Emissions by shifting to