Carbon Credits: A Powerful Tool in the Fight Against Climate Change
Every nation faces significant challenges due to the accumulation of carbon dioxide (CO2) and other greenhouse gases in the atmosphere which causes rising temperatures and extreme weather events. The concept of carbon credits – as the response to the challenges was adopted to allow beneficial ways to reduce emissions and build sustainable innovation to combat climate change.
The Evolution of Carbon Credits
Carbon credits were introduced through the Kyoto Protocol through their Emissions Trading Scheme (ETS). These schemes enable the industry to allocate a maximum number of allowances for the emission that must not be exceeded. This is known as the "cap and trade" principle. Now this has become a powerful tool that serves as a financial instrument that enables the development of projects and initiatives aimed at reducing or removing CO2 emissions.
How Do Carbon Credits Work?
Imagine carbon credit as a global currency for our planet's health. Each credit represents one tonne of carbon dioxide (CO2) or an equivalent amount of greenhouse gas that's been removed from the atmosphere. Step-by-step guide demystifying how carbon credit works:
| Creation: Carbon credit is created through environmentally positive projects such as tree planting, tree preservation, methane capturing, and carbon storage which are meticulously measured and verified by independent bodies. This translated into the generation of one credit representing one tonne of CO2 (or equivalent) removed. |
| Trading: Once the third-party bodies validate the projects and verify the impacts, any entities can purchase those credits to compensate for their emission. |
| Retirement: Once carbon credit is purchased for offsetting emissions, it’s retired. This ensures the same credit isn't used multiple times and guarantees a genuine reduction. |
Why do Carbon Credits matter?
Carbon credits make sustainability a shared responsibility. This credit is a game-changer for several reasons:
| Environmental Impact: Carbon crediting efforts directly contribute to reducing greenhouse gas emissions while promoting green projects such as reforestation efforts, renewable energy development, and other green practices. |
| Economic Driver: Carbon credits often extend beyond just emissions reduction. Carbon credit incentivizes sustainable innovation and green projects that bring economic benefits to the various parties. |
| Social and Ecological Benefits: Carbon market and reduction projects have developed green job opportunities as well as improved living lifestyles for many. This credit can also support biodiversity conservation and improve air and water quality fostering multiple co-benefits for local communities. |
Benefits of Carbon Credits
| Flexible Climate Action: The carbon market used to trade carbon credits opens a volunteering process for businesses and individuals to take action by offsetting their emissions while long-term solutions are funded and well-developed. This allows for a smoother transition to a low-carbon future. |
| Innovation Catalyst: Carbon credits have the “market pull” for innovation solutions especially, financing technologies for renewable energy generation and carbon capture. This incentivizes research and development, accelerating the progress towards cleaner practices. |
| Unity in Action: The carbon market is a global common ground to support green projects and communities by creating jobs, improving infrastructure, and promoting sustainable livelihoods. |
Become part of the solution!
Climate change is a pressing issue, but there are ways for individuals or business stakeholders to make a real difference. Explore Carbon Bank to learn and become part of the solution.