Carbon Credits

Carbon Credits Introduction by Anne Clarke

Carbon credits are an element used to aid in regulation of the amount of gases that are being released into the air. This is part of a larger international plan which has been created in an effort to reduce global warming and its effects.

The plan works by capping the amount of total emissions that can be released by one company or business. If there is a shortfall in the amount of gases that are used, there is a monetary value assigned to this shortfall and it may be traded. These credits are often traded between businesses. However, they also are bought and sold in international markets at whatever the determined market value for them is.

There are also times when these credits are used to fund carbon reduction plans between trading partners.

As previously stated, the central idea is that using these credits will eventually mitigate the effects of global warming. Some detractors claim, however, that the plan does more to make money for its developers than it does to save the earth from itself.

Most countries of the world participate in the credit program. The main formal mechanism is part of what is called the Kyoto Protocol. The goal of the group is to meet emission reduction targets. Over 170 countries make up part of this agreement.

The United States has signed the protocol but not ratified it. This is not due to disagreement with its principles. Instead, concern has primarily been expressed over specific exemptions it holds as well as on the effect it would have on the U.S. economy.

There are a number of countries that work with people who are interested in decreasing the size of their carbon footprint in an effort to help save the environment. These people are not mandated to use carbon credits, but they are adamant about using them in the right way. Many companies will sell the credits to such individuals who want to try to make a difference.

Although the process that must be followed is somewhat complex, essentially what happens is that carbon offsetters will buy the available credits from an investment fund or from a company that specializes in carbon development and has combined all of the credits obtained from a number of individual projects.

Carbon projects may focus on such areas as reforestation, fuel-switching, carbon capture and storage, and energy efficiency. Many major examples deal with renewable energy options. For instance, focus may be placed on creating and advancing wind turbines for wind power, or working with biomass for the creation of biofuels. Solar panels, solar lighting, and solar heating are also important alternative energy areas.

In many ways, the actual quality level of these credits is based in large part on the validation process of the fund development group that is sponsoring the project. A certain level of trust must be placed in these companies that they are managing the credits in the proper manner.

The main reason why this whole project has come about is because of the burning of fossil fuels by industries across the globe. Proponents to the program claim that using carbon credits will make companies more responsible and will even make some companies more money if they manage the credits properly.

Because the program is relatively new, it is difficult to assess how the issuance of credits is being received and observed. The first international treaty was produced in 1992, negotiated in 1997, and signed between 1998 and 1999. It was not put into force until 2005. Upcoming years will demonstrate its efficacy and determine any necessary future adjustments.

Anne Clarke writes numerous articles for Web sites on renewable energy, parenting, and home decor. Her background also includes teaching, gardening, and fashion. For more of her useful articles on green energy, please visit Solar Home, supplier of solar panels and alternative energy.

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