Fossil fuels are a major source of greenhouse gas emissions. Greenhouse gases are generated by power, cement, steel, textile, fertilizer, and many other industries. The major greenhouse gases emitted are carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons. They all increase the atmosphere’s ability to trap infrared energy.
One carbon credit is equal to one ton of carbon. Many individuals are now taking an interest in their carbon footprints, trying to lower their usage, as well as trying different ways to offset their usage. Carbon credits are part of an approach to emissions trading. With a certain amount of greenhouse gas allotted to markets, each individual group is given the opportunity to decide how much of a limited amount can be designated to each area. This allows for industries to control the amount of greenhouse gases they are using. This also allows industrial and commercial processes to market in the direction of lower emissions, or approaches that are used to avoid emitting carbon dioxide and other greenhouse gases into the atmosphere. This helps to finance carbon reduction schemes.
Many companies sell carbon credits. These carbon credits are sold to firms that voluntarily desire to lower their carbon footprint. Carbon credits are purchased from investment funds or carbon development companies. Many of these companies have saved these credits from other individual products, and offset themselves and the buyers by selling them. The quality of the credits is based on the validation process, the type of fund, and the development company. The price is also affected by these things. Voluntary units typically have less value than the units sold through the rigorously validated Clean Development Mechanism.
Carbon credits initially came into existence as an attempt to inform and create awareness of the need to control emissions. Since then, it has been proven that the concept of carbon credits can be highly successful. This tradable system is one of the policy instruments that are very effective. As long as prices are maintained it should continue to be positive.
It is possible to create real carbon credits. This is a supplementary principle that is involved within the Kyoto Protocol. This establishes that it is a Clean Development Mechanism, which is a flexible mechanism. This can develop real, measurable, and permanent emission reductions. This helps to establish that an emission of CO2-equivalent greenhouse gas has truly been reduced and it involves a complex process. This process has evolved as the concept of a carbon project has been refined over the past 10 years.