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Voluntary carbon trading schemes |
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Voluntary carbon trading schemes consist of two variations: personal carbon trading and carbon offset. Carbon trading schemes are designed to minimize greenhouse gas emissions.
Voluntary carbon trading schemes can be divided into two types: personal carbon trading and carbon offset.
Carbon offset
It is a financial instrument that represents a decrease in emissions of greenhouse gases. Carbon offsets are typically measured in carbon dioxide equivalent (CO2e). One carbon dioxide equivalent depicts a decrease in one metric ton of carbon dioxide or equivalent greenhouse gas. In a voluntary market, companies and individuals buy carbon offsets in order to palliate their own greenhouse gas emissions from electricity use and transportation requirements.
Carbon offsets are frequently generated from emissions reducing projects. Typical project type include hydroelectric dams, wind farms and biomass energy. Energy efficient projects also contribute to carbon offsets. Purchase and withdrawal of emission trading are permissible.
The Kyoto protocol has sanctioned the use of carbon offsets as a technique of companies and governments to earn carbon credits. These credits can then be traded in the international marketplace. The protocol facilitated the creation of a Clean Development Mechanism (CDM). CDM measures and validates projects so that real benefits are generated.
Personal carbon trading
This type of carbon trading schemes refers to schemes for emission trading where credits are apportioned to adult individuals on a proportional equal per capita basis. Individuals surrender their personal credits when buying electricity or fuel. Persons who use less than their total allocated credit may sell their excess carbon credits.
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