(Thematic Report) Carbon Credits and Carbon Offsets: scheme for Carbon Reductionby Binita Suwal | 17-07-2021 13:25 |
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Carbon creditIt refers to a permit that allows a company to emit certain quantity of carbon dioxide or other greenhouse gases. One credit allows the emission of one metric tonne of carbon dioxide equivalent. According to the Corporate Credit Institute, a carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one tonne of carbon dioxide or an equivalent of another greenhouse gases. Hence, it can be said that the carbon credit is an instrument that represents ownership of one metric tonne of carbon dioxide equivalent. This system is often called as cap and trade system. This credit is provided to the company that pollute the environment so that they limit their pollution up to the allowed amount only.How does carbon credit work? Any company is allowed to release certain amount of greenhouse gases or carbon dioxide to a limit or cap, set by the central authority. If they exceed this limit, they need to purchase carbon credits or carbon offsets whereas if they don¡¯t exceed this cap, they can sell unused carbon credit. Carbon offset It refers to the action (Such as land restoration or planting trees) intended to compensate for the emission of carbon dioxide into the atmosphere by company or human activities. One tonne of carbon offset represent reduction of 1 tonne of carbon dioxide or its equivalent in other greenhouse gases. Carbon offset scheme allows individuals or company to invest in environmental project around the world to balance out their own carbon footprint. When someone buys a carbon offset, the invest ultimately goes to pay for a reduction of greenhouse gases that has already occurred. Hence, carbon offset has many benefits as it helps the environmental project that can't secure funding on their own, it provides a structure for the companies which helps in tracking their own carbon footprint and it also provides valuable resources to the project that generally either sequester Carbon through forest growth and order mechanisms or avoid emissions such as renewable energy generation or clean energy appliances.   Both carbon credits and carbon offsets aimed to reduce the carbon emission and greenhouse gases. Carbon credits stand for the right to emit the carbon while carbon offset represents the production of certain amount of sustainable energy to counterbalance the use of fossil fuel. These are the better initiatives to achieve carbon neutrality by reducing current carbon emission. |
