You carbon credits are a kind of certificate obtained by countries that have managed to reduce their carbon dioxide (CO) emission levels2) to the atmosphere. These credits can be traded with countries that have failed to meet their CO emission reduction targets.2, thus becoming a currency. Thus, when a ton or more of carbon is no longer emitted into the atmosphere, a calculation is made to show the total credits generated for those who stopped polluting.
How does the carbon credit market work?
The carbon credit emerged as a modality of reducing the emission of gases from greenhouse effect from the Clean Development Mechanism (CDM). It originated as a alternative to developed countries that fail to achieve their reduction targets.
In basic terms, the calculation is made for each ton of carbon dioxide that is not emitted into the atmosphere. This ton corresponds to a unit called Certified Emission Reduction.
1 ton of carbon dioxide → 1 carbon credit |
The CDM acts according to three aspects:
- Unilateral: carried out with a developing country that promotes a project in its own territory that will help reduce greenhouse gas emissions. The credit generated by this project can be traded with the developed countries.
- Bilateral: carried out with a developed country that promotes the reduction of greenhouse gas emissions and the sustainable development within the territory of a developing country. Thus, the country in which the project was implemented is generated a credit that can be traded with the developed country that implemented it.
- Multilateral: carried out with projects aimed at reducing carbon dioxide emissions implemented and financed by an international fund.
Read too:What is climate change?
How are carbon credits traded?
If marketing is unilateral, who decides the values is the country that holds the carbon credits and that implements the project to reduce gas emissions in its own territory. If the marketing is bilateral, who decides values and rules for the business is the developed country that implements the project in the territory of a host country. And, finally, if marketing is multilateral, the values for the sale of carbon credits are established by investment funds.
According to Point Carbon (one of the biggest sources of information about the values of carbon credits), in 2007, the carbon market started to move 40 billion euros. Brazilian carbon trading is carried out by the Future Mercantile Exchange through auctions.
→ Exchanges of carbon credits in the world
Europe |
European Union Emissions Trading Scheme |
Oceania |
New South Wales |
America |
Chicago Climate Exchange |
Asia |
Keidanren Voluntary Action Plan |
Read too: Impacts generated by anthropic action
Advantages and Disadvantages of Carbon Credits
→ Advantages
Carbon credits alone represent a benefit, since they correspond to one ton of carbon dioxide not emitted into the atmosphere. This non-emission helps to reduce global warming and promotes stabilization of the greenhouse effect.
Another positive point of carbon credits is that they represent a alternative countries that find it difficult to reduce their emissions. Those can then buy them and reduce their debts.
Another issue is related to the developing countries, who have the chance to have in their territories projects that aim at sustainable development, as well as boost your economy through the carbon market.
→ Disadvantages
There are controversies when it comes to the carbon market. Many scholars and environmentalists believe that these credits, in a way, give the right to pollute the country that does not achieve its goals. These countries continue to emit large amounts of greenhouse gases into the atmosphere, but maskthis reality with the purchase of credits.
Kyoto Protocol and carbon credits
Carbon credits emerged based on the Kyoto Protocol, but do you know what this protocol is? O Kyoto Protocol it is a international treaty signed by several countries (including Brazil) whose main objective is to stabilize and reduce the emission of greenhouse gases into the atmosphere, especially the carbon dioxide.
This protocol emerged due to the concern with climate change and environmental interference caused by anthropic actions. The world scenario changed from the Industrial Revolution, which, when inserting new technologies and means of production in the production process, it changed the mode of consumption and, consequently, its relationship with the environment. The increase in productive capacity increasingly demanded the use of natural resources.
This relationship was built in a way messy and irrational, generating several discussions between the scientific community, environmental organizations and governments. Based on these discussions, several agreements emerged. The Kyoto Protocol is one of them. Created in 1997, the agreement only entered into force on2005, because of the difficulty found for some nations to ratify it. A great example of this was the non-adherence of U.S, the most polluting nation in the world. The US government claimed that the goals established by the protocol would bring several damages to the country's economy.
Talking about goals, it is important to say that the Kyoto Protocol establishes goalsspecific about emissions, which differ from one nation to another. Not all countries that signed the agreement have an obligation to reduce their emissions, so their collaboration is voluntary. To learn more about this protocol, go to: Kyoto Protocol – what it is, objectives, member countries.
