Carbon Expert - What Are Carbon Credits?

Dealing with the consequences of climate change has had a global impact. In 1990, 37 countries signed the Koyoto agreement. It was agreed that greenhouse gas emissions must be lowered by 5.2% of the amount produced in 1990. The target date set for this was 2012. Carbon credits have become a major part of the solution to the problem.

Reducing global carbon emissions was going to be expensive. In order to calculate the social and economic costs of reducing carbon emissions, it has been necessary for governments to employ value judgements and make moral decisions.

These moral decisions were made because the necessary reductions in carbon emissions posed a huge cost to many industries. The fairness involved in sharing the cost of lowering the carbon emissions was the primary consideration. Carbon credits were designed in order to deal with these issues and concerns.

The aim of carbon credits was to limit the growth of greenhouse gas production. It now costs money if a company exceeds its limit for greenhouse gas production. Carbon credits now play a vital role in helping national and international organisations to lower harmful greenhouse emissions.

Originally, carbon credits were designed to encourage industry and commercial businesses to develop more environmentally friendly production methods. The incentive was to cut emissions, and then trade any remaining credits. Companies who succeed in developing more environmentally friendly production methods will have a surplus of carbon credits available to trade.

The carbon emissions cap signifies the maximum greenhouse emissions permitted by each company. Each participating country enforces a cap on greenhouse gas production. This is now the agreed method for the reduction of greenhouse gas over time, to the safely agreed limit.

Those who continually exceed the emissions cap will need to buy more credits. Carbon offsetting occurs when a company likely to exceed the agreed threshold purchases carbon credits in order to compensate for the extra contribution of carbon dioxide. These companies effectively increase the amount of emissions they can produce buy buying carbon credits to offset the problem.

Carbon credits now provide a means of currency for businesses or companies who are likely to exceed the permitted limit for greenhouse gas emissions. Companies can purchase carbon credits to lower their carbon footprint. A company’s carbon footprint refers to its total emissions of greenhouse gases including carbon dioxide.

A carbon credit represents the value of 1 tonne of carbon dioxide, or greenhouse gases to the equivalent value (CO2e). Carbon credit certificates or permits can now be traded through a broker, not unlike other commodities. There are a limited number of brokers permitted to do this.

The Carbon Trade Exchange provides a platform for the exchange of carbon credits. This works in much the same way as a stock exchange. Brokers can enable individual investors to start trading in carbon credits. This type of trading is part of the futures market and is growing more and more popular among private investors. This is due to the fact that it is relatively easy to start trading, with an initial small capital injection.

Carbon Expert enable our clients to purchase verified carbon credits and participate in an established globally recognised carbon trading platform.

We are among the leading brokers in emissions spot trading within the voluntary carbon credit market.