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Carbon credits |
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Carbon credits leads to creating more cleaner and healthy atmosphere. Carbon credits are certificates that are sold to industries who have achieved the target of emission reduction to large extend.
With developing economies several nations have also progressed in emitting carbon and other form of gases. This has resulted in warming of the globe. There has always been a debate about how to reduce emission of harmful gases that causes global warming. In answer to this, several developed and developing countries have come together and signed an agreement, which is named as the Kyoto Protocol.
Kyoto Protocol is phenomenon that has been voluntarily accepted by countries that emit more carbon and other gases. They have decided together to reduce the level of carbon they are emitting from the earlier years of 1990s. Most of the developed European countries have already decided upon reducing the level of emission of carbon to considerable level from the period from 2008 to 2012. For this they have decided upon several norms to reduce level of emission that was fixed at a level by the companies and factories of these nations.
Any company can utilize two ways to reduce emissions. One way can be by utilizing new technologies or improving the existing technologies that are in use. This effort can reduce emission of green house gases to large extent. In order to adapt new technologies one can tie up with several other development nations and set up new eco-friendly technology, which is already in use in the developed nations. As the countries reduce emission of gases they earn credits. These can be treated as incentives that are awarded for reducing emission level of carbon and other gases. The total annual emissions are clubbed and a monetary value is awarded.
Thus, carbon credits are created by several developed nations to make the world adopt cleaner technologies so that there is savings in energy consumption. For each reduced tonne of carbon dioxide emission, a carbon emission certificate is awarded. This certificate can be sold either today or in future market, just like any commodity.
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