Carbon Footprint

In accordance with the Koyoto agreement, a company is required to measure the amount of greenhouse gas they produce. The total sum of greenhouse gas emmissions that a company produces, is known as the carbon footprint. In the 37 countries who signed the Koyoto agreement, governments impose a limit for greenhouse gas emissions. This limit is known as the emissions cap.

The term: “carbon footprint” is a generic term, which refers to the total greenhouse gas emissions created by a country, company or individual. The discussion of the carbon footprint has arisen out of the debate on how to control global warming.

Countries that have an economy which is largely dependent on fossil fuels and carbon intensive manufacturing methods for example, will have a higher carbon footprint. Countries that invest time in environmental schemes and renewable power sources, while adhering to an emissions cap, will have a lower carbon footprint.

The contributary factors, to a nation’s carbon footprint are: population size, the strength of the economy, and the dependancy of the economy on carbon intensive methods. The carbon footprint of a country, company or individual can be measured through a greenhouse gas emissions test or GHG assessment. Companies can use self assessment processes to calculate their carbon footprint. Once the carbon footprint has been calculated, an action plan can be devised to deal with the problem.

It may seem obvious to many that the most effective way to lower greenhouse gas emissions would be to opt for more environmentally friendly production methods or to use less fossil fuel. The process of change in reality is a little slower and new technologies take time to develop.

The carbon market was designed to provide a means for companies set to exceed the agreed limits for greenhouse gas production to buy carbon credits. Carbon credits represent the right to produce 1 ton of carbon dioxide or greenhouse gasses to the same value.

Companies that have more ecological viability will gain carbon credits for staying well below the current emissions cap. These companies can choose to sell their carbon credits to either private investors, or to companies that are due to exceed safe limits. Buyers of credits can use them in this way to offset the amount of emissions they have produced over the safe limit. This is due to become more expensive in future as the value of each carbon credit continues to rise.

There are a number of changes to the carbon market, scheduled for next year. There has been talk of the USA joining the current cap and trade scheme to lower greenhouse gas emissions. China, India and Japan have also expressed an interest.

The carbon footprint of the travel business is to come under scrutiny in the EU next year. This business is still heavily dependent on fossil fuels. Flights entering and leaving Europe may be required to work with an emissions cap also. More must be done to deal with the problem of global warming in the future, if targets for keeping it to a minimum are still not being met across the globe.

Carbon Expert provides access for our clients to the carbon credit trading market in an innovative and forward thinking way, offering OTC trading of VERs via its network of professional carbon brokers.

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