Question

Explain the term carbon credits.

Answer 1

• Carbon credit is a tradable permit scheme. It is a simple, non-compulsory way to counteract the greenhouse gases that contribute to climate change and global warming.
• Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air.
• A carbon credit represents one tonne of carbon dioxide either removed from the atmosphere or saved from being emitted.

1 credit = 1 tonne of CO2

• Carbon credits are certificates awarded to countries that are successful in reducing emissions of greenhouse gases. Carbon credits are generated as the result of an additional carbon project.
• Carbon credits can be created in many ways but there are two broad types:
  1. Sequestration (capturing or retaining carbon dioxide from the atmosphere) such as
  Afforestation and reforestation activities.
  2. Carbon Dioxide Saving Projects such as use of renewable energies
  The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions. Carbon credits were one of the outcomes of the Kyoto Protocol, an international agreement between 169 countries which created legally binding emission targets for developing nations.