Carbon Credits - An Overview

The environment has become prone to catastrophe with the increase of global warming resulting from burning of carbon compounds resulting in increase of carbon dioxide. The concern of saving the environment has become a critical issue among different industries around the world; this gave birth to the concept of carbon credits.

This concept was proposed in the Kyoto Conference which took place in 1997. According to  Kyoto protocol, industries which manufactured environment friendly equipments or contributed to reduction of carbon dioxide in the atmosphere were given carbon credits which had a specific monetary value. These carbon credits could be bought by other industries around the world which did not fulfill the maximum carbon dioxide production so that they were not penalized.

Even though the movement started in 1997, India has just started to take interest in the concept. In the past years, about 5 billion dollars worth carbon credits were credited to the industries around the globe among which 1 billion contribution came from India. Denmark and UK are far ahead in the race of corbon credits and implementing strategies to reduce carbon usage. The countries that follow are Australia, Japan and New Zealand.

The concept of carbon credit and the Kyoto protocol has resulted in countries who have volunteered to reduce the carbon production and other greenhouse gases like ozone, methane, nitrous oxides, water vapor etc. and thus have started contributing to the environmental healing. As stated by the protocol, there were suggested two ways for increasing the carbon credit-one of which is by upgrading the business and equipments so as to produce lesser carbon compounds. This is the best method for the industries especially in the developing countries. And second, by helping industries of any developing country to reduce their carbon emission. This is mostly done by the developed countries like the UK.

Apart from the mainstream crediting, even individuals are allowed to hold these credits and they can use this credits to buy electricity, heat etc. As mentioned in the Kyoto protocol, the ­individuals like farmers can also know the standard level of carbon production allowed by his business and they can be recognized by the United Nations Framework Convention on Climate Change, the amount by which he is producing less carbon and get credited for contributing to the development of his country. This is another utility of the carbon credits for the people.

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