High Street Headache

January 27, 2010

The Booming Carbon Trading Market

Filed under: Business — Tags: , , , , , , , — Edmon Lee @ 8:56 am

Carbon trading is a method adopted to decrease the carbon footprints of industrialized nations, and the method has gained wide acceptance throughout the world in recent times. Carbon trading is essentially a trade in carbon credits in which every unit of credit allows the buyer to release one tonne of carbon dioxide and other greenhouse gases into the atmosphere, and it is the fundamental trading principle governing the cap-and-trade system as formulated in the Kyoto Protocol.

As per the Kyoto protocol, a cap has been set on global emission levels, which are then apportioned into carbon credits, a particular number of which are granted to each member. Organizations that think they may go beyond the emission limits can purchase these credits from low-emission companies that have credits left with them because of adopting eco-friendly methods of doing business. As high-emission organizations are forced to pay for their act, they are driven to look for greener technologies.

So far carbon trading has been an effective system, with market responses suggesting that most large industries across the globe are supporting this emission-lowering solution. This is because such reciprocal trade makes their near future and medium-term planning more accommodating.

If the statistics of the World Bank’s Carbon Finance Unit are to be believed, then carbon trading is increasing very rapidly with each passing year. The years 2003 and 2004 saw a trading growth of 41% in the market, while the growth in the following cycle has been an unprecedented 240%. Growth in the London centred carbon finance market has also been very remarkable, establishing the fact that carbon trading is turning out to be a profitable business strategy for many organizations. Despite being outside the Kyoto Protocol list of countries, several states and industries in the US have approved of the carbon credits scheme and have incorporated it in their business. Further, the EU, which has its own carbon trading system, has also been very active in this global trading market.

However, there are certain groups who have criticised this system. Carbon trading is in fact targeted at making high-emission companies invest in more eco-friendly technologies and thereby promoting development of low emission energy substitutes, which is not happening because defaulting companies seem to be keener on buying carbon credits instead of opting for eco-friendly technologies. Hence certain groups are apprehensive of the long-term benefits of carbon trading, and some experts have suggested the imposition of carbon tax to be paid by errant companies as a better solution to greenhouse gas emissions.

Learn more about carbon credits and carbon offset and get a deeper understanding on how you can help in saving the environment.

The Basics Of Carbon Credits And Its Benefits

Filed under: Business — Tags: , , , , , , , , — Christine Morgan @ 8:24 am

The words carbon credits and carbon trading usually come up in conferences and events on the perils of global warming, but these terms are still alien to a lot of people. In the system of carbon trading, regulations are put on greenhouse gas emissions under the Kyoto Protocol, and the prescribed emission limits are then allocated across nations, which have to regulate the greenhouse gas emissions from the different industries and business units operating within them.

Governments and industrial units in several countries are allowed a particular number of carbon credits, giving them the right to emit a limited amount of carbon dioxide and other greenhouse gases into the atmosphere. One carbon credit is equivalent to the emission of one ton of carbon dioxide. This basically means that high-emission corporations can purchase carbon credits from low-emission entities, thereby maintaining the net global emissions within the prescribed cap.

The key benefit of carbon trading is that it leads to a scenario where companies tending to go beyond their emission allowances have to pay a significant sum to do so, as they have to purchase carbon credits from the market. However, this is a quid pro quo trade where selling and purchasing of carbon credits are done simultaneously by low and high emission companies. Therefore the balance in world economy is maintained, while entities with low emission records make profits. This encourages organizations to invest in green processes as well and gradually the net greenhouse gases emissions begin decreasing.

Free trade of carbon credits on world exchanges enables greener energy and process choices of a company to be incentivised and capitalized, whether the company is a small one or a large one. Trade in carbon credits gets instant and substantial advantages for organizations with low emissions. Moreover, with countries and their administration involved in the idea, national governments on their part would have to ask local industries to reduce emissions, and hence these governments would be pulled out of their conventional stance of indifference towards environmental issues.

However, there are a few people who advocate alternative systems like carbon tax, which rather than incentivising the greener organizations, will penalize those who have extra emissions. There is much speculation over the efficacy of such systems.

In a short span since its adoption, carbon trading has shown to be the most appropriate means to tackle the problem of carbon emissions. The carbon trading business has seen remarkable growth in the past few years, and this proves beyond doubt that the system is impactful.

Discover more about carbon credits and carbon trading and get a deeper understanding on how you can help in saving the environment.

December 11, 2009

What Is Carbon Trading Exactly?

Filed under: Business — Tags: , , , , — Christine Sanders @ 8:05 am

You may or may not have heard about carbon trading. If you have, you may be curious what it is. Here is how it works.

Carbon trading is a simple concept. The authorities allow companies to buy a restricted amount of carbon credits in the form of an allocation. These companies may then apply this allocation for carbon discharges. Should they exceed their carbon credits, but still have to expel carbon discharges, the business is then accountable for finding another business ready to trade or sell them more carbon credits. In this fashion, there will be lowered polluting methods.

If ever a business is incapable of buying additional carbon credits from another business, they won’t be allowed to exhaust any pollutants. The penalty, though, wouldn’t be being fined for closing down businesses (which by the way makes people unemployed). Instead, a lot of governments plan to find first a tier up where they’ll trade the required carbon credits.

How are carbon emissions assigned? At the beginning, the authorities determine how much the company will be let to pollute and places a carbon limitation on its discharges. As time goes by, the authorities reduce the cap. The guess is that sooner or later, the government will reduce this cap which will then let businesses to carry on its processes while transitioning to a better, greener environment.

Present day carbon trading efforts still have great flaws. Explorative carbon trading proposals, even carbon tax proposals, seem full of privileges for governmental acquaintances.

Meanwhile, numerous businesses say they want to eliminate pollutants altogether to run active businesses. However, they can’t substitute their factories and retain employees straight away. In addition, they need to question why their products will cost considerably more than imports taken from nations with less limitations and measures, resulting to inexpensive costs. In fact, many companies debate that they are being punished when it comes to contending with countries that are more nonchalant about abiding by carbon trading and other carbon reducing rules.

Learn more about Carbon Trading and Carbon Offset and get a deeper understanding on how you can help in saving the environment.

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