With the levels of CO2 and other greenhouse gases in the air increasing to alarming levels, there has been rising international concern about the immense damage they cause to the environment. Instruments like carbon credits and carbon offset were introduced in order to improve the situation by encouraging firms which are more eco friendly in the manner in which they run their operations.
The concept of carbon credits was developed recently. One carbon credit permits the emission of one tonne of CO2 or an equivalent amount of some other greenhouse gas into the air. Through the buying and selling of carbon credits in the carbon trading system, the total amount of global emissions can be regulated.
Carbon credits are allocated among companies to limit the amount of greenhouse gases such as carbon dioxide that they release. Organizations resort to carbon trading if their emissions do not fall within their share of carbon credits in order to purchase credits due to a legal compulsion. They buy them from companies with lower emissions having spare carbon credits.
Hence, the worldwide carbon emissions remain below the prescribed limits, and companies are encouraged to opt for more eco friendly manufacturing processes in order to decrease emissions so that they do not have to incur expenditure on the purchase of carbon credits. The method also incentivizes green firms and motivates them to adopt greener means so as to enhance their profits through sale of their carbon credits in the market.
It is easy to buy carbon credits from numerous agencies that sell them in a free market from where they can be purchased like any other financial instrument. Carbon credits can also be purchased by persons not representing any organization, if they desire to reduce their own carbon footprint. The money you invest in this manner is utilized for sponsoring ecological campaigns that are being conducted across the globe in order to neutralise the effects of emissions from your activities.
