Carbon trading is a method adopted to decrease the carbon emissions by industrialized nations, and the method has received wide acceptance throughout the world in recent times. Carbon trading involves the selling and purchase of carbon credits, where every single credit permits the emission of one tonne of carbon dioxide and other greenhouse gases to the buyer, and is the key element of the cap-and-trade system implemented in several countries which adhere to the Kyoto Protocol.
As per the Kyoto protocol, a cap has been set on global emission levels, which are then apportioned into carbon credits, a certain number of which are granted to each member. Organizations that feel they may cross the emission limits can buy these credits from low-emission companies that have credits left with them because of opting for eco-friendly methods of doing business. High-emission operators are discouraged for their excessive emissions by this monetary compensation for polluting the environment.
So far carbon trading has been a success, with market reports suggesting that several large companies across the world are supporting this emission-lowering solution. This is because such quid pro quo trade makes their short-term and medium-term planning more accommodating.
If the statistics of the World Bank’s Carbon Finance Unit are to be believed, then carbon trading is growing very rapidly with each passing year. The years 2003 and 2004 saw a trading growth of 41% in the market, while the growth in the following cycle has been an unprecedented 240%. The London based carbon finance market has also grown at an amazing rate, which clearly shows that the business of carbon trading is fetching good profits for several organizations in the world. Even though the US did not sign the Kyoto Protocol, many of its states and organizations have taken to the carbon trading practice. In addition, the EU with its own carbon trading system has also been performing a key role in the carbon trading market.
However, some sections of people are not convinced about the effectiveness of carbon trading. Carbon trading is in fact targeted at causing high-emission companies invest in greener technologies and thereby promoting development of low emission energy alternatives, which is not materializing because errant organisations seem to be more interested in buying carbon credits instead of opting for eco-friendly technologies. Hence some groups are doubtful of the long-term advantages of carbon trading, and some specialists have suggested the imposition of carbon tax to be paid by negligent companies as a more appropriate solution to greenhouse gas emissions.
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categories: carbon management,carbon emission,business,environment,carbon offset,carbon credits,carbon trading,carbon information
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