To limit global warming to 1.5degC, in line with the Paris Agreement, we need to cut current greenhouse-gas-emission levels in half by 2030 and reduce them to “net zero” by 2050.
What happens to things that aren’t carbon-free? One option could be credits for carbon.
In exchange for paying another party to reduce their carbon emissions or capture carbon companies can offset their environmental footprint. They can even in the most ambitious scenarios, make use of carbon credits to achieve carbon neutral status.
Carbon credits: What do they mean? how can they be used?
The basic idea behind the theory is. If one party isn’t able to stop releasing CO2, it could demand another party to emit less in order that, even though the first produces CO2 it will result in the entire amount of carbon pollution in the air decreases.
There are three main kinds of carbon credits.
The ones that result from lower emissions (typically measures to improve energy efficiency)
Reduced carbon dioxide emissions (carbon capture and forest planting)
and avoiding emissions (for example , refraining from cutting down forests).
Businesses can meet their targets for climate protection by buying credits to offset their current emissions. However, certain companies, such as Microsoft has committed to go even further by using credits to cover all of their historical emissions for Microsoft’s instance which dates back to 45 years.
Other companies have reduced their carbon emissions in the majority using credits in order to pay for those that they are unable to eliminate. Credits are usually sold in the form of one ton of CO2, and it is estimated that credits of around 2 billion tonnes CO2 are required for reaching the 2030 goal.
Building Transparency
There was no uniform method of trading carbon credits, and there is no way to confirm the compensating activities behind these credits. Environmental groups have said that the system is “fraught by scandals” and have accused that some countries have increased emissions to pay to cut the emissions.
The allegations, along with others, have prompted the Financial Times to declare: “Carbon offset is shaping up to be the biggest selling scandal since Dominican friar Johann Tetzel sold pardons to help deceased.”
However, a report from the international taskforce headed by UN Special Envoy for Climate Action and Finance Mark Carney and headed by Bill Winters, CEO of Standard Chartered Bank, has created a blueprint for the creation of large-scale open carbon trading market that are based on independent verification of the claims of reductions in CO2 emissions are true. In addition, the World Economic Forum is observing the initiative.
“While offsetting is an important instrument, offsetting shouldn’t be used to substitute for direct reductions in emissions from corporations,” they say. “It’s essential to ensure that any offsetting which forms part of commitments to climate change is conducted through high-quality projects.”
In order to be able to trade carbon credits should be built on projects which have been independently validated as well as monitored through their lifespan. Data must be secured to prevent tampering. It suggests using blockchain technology to create an irrevocable record.
The report also states that carbon credit trading that can be verified aid developing countries in obtaining international financing “as projects and activities in these countries could be a cost-effective way to achieve carbon emission reductions.”
For more information visit Carbon.Credit.
Carbon credits and their use
It’s currently the largest forest-based avoided emissions project. The project claims it has stopped the release of around 37 million tonnes CO2 as well as has saved 200 hectares of rare peat swamp forestthat houses five endangered species, such as those of the Borneo orangutan.
Europe’s industries with the highest energy demand which include airlines that operate flights between EU members, could already make use of carbon credits to comply with the obligatory limits on their emissions as part of the EU Emissions Trading Scheme (EU ETS) that has been in operation since.
