Where do carbon credits come from?

Last Updated : June 01 2017

Where do carbon credits come from?

by Chloe Johnson 2017 May 26

Where do carbon credits come from?

Carbon credit is a tradable commodity for businesses all over the globe. International trade of carbon credit was created to help reduce the cumulative yearly footprint created by certain types of business practices. This system of "green" currency was designed to give companies a little time to adjust their practices toward more environmentally friendly systems of operation.

The carbon dioxide that is a waste product of some types of businesses is considered a significant influence in global warming. Environmental groups have pushed for many years to have an accountability system for such dangerous by-products.

Most believe that emissions such as these cause a major acceleration in the rising average of world temperatures. When it was IPCC (International Panel on Climate Change) declared that global warming is a fact, it settled the question that had been debated for years.

This gave environmental groups the leverage they needed to insist that companies become more responsible in their production practices. The Kyoto Protocol, an international treaty to reduce emissions, as a direct result of these developments, went into effect in 2005.

This agreement was signed by many industrial and developing countries. In this document, they agreed to put a cap on the amount of emissions that they would produce.

This agreement would be impossible to meet without the advent of carbon credit. Each one represents about one metric ton of CO2 emissions. Many companies will need a lot of time to alter their practices in order to stay within their individual allotments for emissions.

Conversely, some companies do not use up all their allotted emission amounts. These can be converted to credits that can be bought and sold on a commodities market. This practice enables companies to stay under their cap.

Purchasing these certificates to counteract high emissions "buys" some time in order to make conversions to their production and working systems. Becoming more environmentally friendly is time consuming and expensive.

However, even though the United States never ratified the Kyoto Protocol, many companies in the states have voluntarily worked at staying within their limit of allowable emissions. To do this, a carbon credit is purchased for each metric ton of CO2 to help offset the amount of emissions that are produced in their operating practices.

Consumers as well as employees like to know they are working for environmentally responsible companies. Buying theses certificates allows companies to show their commitment to making the world a better place to live.

This practice attracts quality employees. It also proves to the consumer that the company is serious about benefiting the greater good.

An upsurge in awareness of global warming in recent decades has led to some changes in the way business is conducted on an international scale. The temperature of the planet is everyone's business and everyone must do their part to help provide for a brighter tomorrow.

Chloe Johnson
#1 Chloe JohnsonAuthor 18 March, 2014, 12:37 Chloe Johnson is a happily married mother of 2. She loves spending time with her kids and her husband. She loves dogs and enjoys travelling in any places.