Over the years, I’ve heard of a wide range of unique ideas on how to tackle climate change—which is good! Having plenty of options can only do good. But sometimes I can’t help but stare at the latest headlines and wonder what the pitch meeting for some of these ideas must have been like.
Carbon credits, in simple terms, are a market-based mechanism designed to reduce greenhouse gas emissions, particularly carbon dioxide, which is what’s keeping all the heat stuck in our atmosphere. They operate within the framework of emissions trading systems, where governments, businesses, and other entities can buy and sell permits that allow them to emit a certain amount of carbon dioxide or its equivalent.
In other words, they get a “budget” for pollution.
In a cap-and-trade system, a government sets a limit or cap on the total amount of greenhouse gases that can be emitted within a certain time period, often for a specific industry or for the entire economy. This cap gets smaller and smaller over time as a way of saying: “Maybe you should start lowering your emissions while you still have the chance.”
Under the cap, emission allowances are distributed or auctioned off to companies. Each allowance permits the holder to emit one unit of greenhouse gas, often measured in metric tons of CO2 equivalent.
Companies that emit less than their allocated allowances can sell their excess allowances to those that exceed their limits. This is what really got me interested as I can really see how this would encourage companies to be invested in lowering their emissions if the incentive was big enough.
Companies or individuals that cannot reduce their emissions sufficiently to meet their allocated allowances can purchase carbon credits to offset their emissions. By buying these credits, they effectively “neutralize” their emissions by investing in projects that reduce emissions elsewhere.
In addition to allowances, carbon credits are units representing the removal or reduction of one metric ton of CO2 or its equivalent from the atmosphere. These credits can be generated through various activities such as reforestation projects, renewable energy projects, or investments in energy efficiency.
Carbon credits are typically issued by independent third-party organizations that verify and certify the emission reductions achieved by the projects. This is meant to ensure the integrity and credibility of the credits. Whether or not it succeeds remains to be seen.
One downside that sticks out to me about all this is that it gives a lot of companies the chance to feign being environmentally friendly instead of actually being environmentally friendly. This could either be the next step towards solving climate change at its source, or it will be a brand-new method of “greenwashing.” Think of the times where companies were putting “bio-degradable” and “ethically sourced” on their products.
If the bigger companies can get enough of a grasp on it, they may start exploiting whatever loopholes there are to boost their public image while making a profit. We’ve seen what they do with the stock market, they could very well do it again with this.
We’ll have to keep an eye on future developments to see if this can pan out; if not, then we’ll at least have something to learn from for the future. Like I said earlier: it is good to have plenty of options available. Carbon credits seems like just the right combination of radical and practical to offer some serious benefits for the future. We’ll have to wait and see how it goes, but at the moment, I’m optimistic.
ABOUT THE AUTHOR: Stawie is a tech-loving young optimist, intrigued by the mysteries of what lies ahead.
