The Booming Carbon Trading Market
Carbon trading emerged as a regulatory mechanism to check CO2 emissions, and it has increasingly caught the fancy of governments and organizations across the world. In carbon trading, carbon credits are bought and sold by companies and other entities across the world under the innovative cap-and-trade system, where each credit permits the emission of an equivalent of one tonne of carbon dioxide and other greenhouse gases to the environment.
The Kyoto protocol has fixed a cap on how much discharge can be allowed globally, which is later transformed into carbon credits, and each operator gets a certain amount of these credits. Companies that have extra credits due to their adherence to greener alternatives can sell credits to companies that will fall into the high-emission category for going above their authorized limits. As high-emission companies are made to pay for their act, they are driven to opt for greener technologies.
So far carbon trading has been a success, with market responses suggesting that most large industries across the globe are supporting this emission-lowering system. This is because carbon trading allows them flexibility in their short-term and medium-term planning.
Carbon trading is increasing exponentially every year, according to the figures reported by the World Bank\’s Carbon Finance Unit. There was a 41% rise in the market between 2003 and 2004, and a huge 240% increase between 2004 and 2005. The carbon finance market, centred in London, has also seen immense growth, which clearly indicates that the trade of carbon credits is proving to be a profitable business for many organizations. Several states and industries in the US have also adopted carbon trading practices, even though the country is not a signatory to the Kyoto Protocol. Besides, the EU with its own carbon trading system has also been playing a key role in the carbon trading market.
However, this trend has not seen a favourable reaction from some parties. Carbon trading is actually targeted at making high-emission companies invest in more eco-friendly technologies and thereby promoting development of low emission energy substitutes, which is not materializing because defaulting organisations seem to be keener on buying carbon credits instead of opting for eco-friendly technologies. Hence the efficacy of carbon trading has been open to debate, with some environment specialists suggesting imposition of carbon tax to be a better alternative for achieving a clean environment.
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categories: environment,carbon offset,carbon credits,carbon trading,marketing,carbon emission
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