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How to Earn a Carbon Credit?
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- If a company or organization produces one ton less of carbon or carbon dioxide than what’s normally allowed for its operations, it earns a carbon credit. Essentially, it’s a reward for being more environmentally friendly.
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Why is it Helpful?
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- Countries that agreed to the Kyoto Protocol set rules for companies to limit their greenhouse gas emissions.
- If a company can’t meet these limits on its own, it has two options. It can either use new technology to reduce emissions or work with developing nations, helping them use eco-friendly technology. In return, the company gets credits, allowing it to emit a certain amount of gases at home.
- However, only a part of these credits earned in a developing country can be used in the company’s home country.
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Who’s Involved?
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- Countries like India and China are expected to sell a lot of carbon credits, with Europe being a major buyer.
- In the global market, carbon credit trading is a big deal, estimated at $5 billion, with India contributing around $1 billion.
- China dominates this market, controlling about 70% of it. Interestingly, carbon is now being traded, like any other commodity, on India’s Multi Commodity Exchange (MCX), making it the first exchange in Asia to do so.
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