Carbon Trading - General Information

Posted under environment by Mary Roberts

Carbon trading is a concept we may or may not be familiar with. We may have heard of it, but not know what it is about and how it works to lower the carbons being given off to the atmosphere.

How does the carbon emissions trading scheme work? An administration basically figures out the amount carbon emissions are sent into the air by every industry. It then reduces the total percentage to meet their international duties. Every industry has to then meet the lowered target or pay a fee based on how much they are over. When a company reduces its emissions below the level, it can sell their unused amount to other companies who may need more carbon credits to avoid fees.

So how are these industries suddenly shrinking their carbon emissions? How are these reduced emissions enough to observe the authorities’ requirements & still be enough to allow the business to sell to their contemporaries as carbon offsets? You’d think if it is possible nowadays, it is most likely possible then. The thing here is, companies are more probable to be more sensitive to these issues when there are fines imposed.

There is one unfortunate defect however: carbon trading can and most likely will affect the people. Because companies might suffer from big fines arising from carbon trading, these companies can charge the people so they can still pay fines without affecting their profit. There is still space for betterment, of course, because carbon trading is generally a new process not many people know of.

The good thing about carbon trading though, is that even if it isn’t a perfected process, it has helped the environment a lot already. According to the World Bank’s Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO2e) were exchanged via projects in 2005. It shows a 240% increase comparative to 2004 (110 tCO2e) which was itself already a 41% increase relative to 2003 (78 tCO2e).

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