How does carbon trading reduce carbon emissions?

Question

If a company that reduces its carbon emissions is able to 'sell' its carbon credits to another company that is unable or unwilling to reduce its own emissions, surely there has been no net reduction.

Have I completely missed the point of the scheme?

Answer 1

You actually missed the point.

The purpose is to encourage companies to reduce emissions. If one of two companies manages to do so, the total amount of emissions is anyway lower than what it would have been if both companies had done so. The fact that credits are sold to another company only has the purpose to dicrease the fines companies have to pay for high emissions

Answer 2

The idea is to reduce the overall gas emissions. You are right , is company a is at 25% of its set quota of emissions for that year, selling its credit to others which have exceeded their quota wont do as much good as you might think,. But this is an incentive for a company to be able to reduce, in the age of raising costs most companies want to cut their operations costs to be able to show decent profits, going forward as energy becomes expensive, so will the energy offsets and this will bite into the bottom line of a company, hence the incentive to reduce emissions... I hope it made some sense.

More at http://www.greenlineindex.com

Answer 3

You are correct that trading by itself does not reduce carbon emissions, but it does minimize the overall societal costs of meeting emission reduction targets by reducing carbon emissions where it is least expensive to do so.  By minimizing costs, a government may be willing to set a more stringent cap on the overall level of carbon emissions allowed in the economy than it would be otherwise.  The theory is that, without carbon trading, politicians and regulators would not be as willing to establish as aggressive of emissions reduction targets as with carbon trading because it would be too expensive.

Answer 4

I think the carbon credit system came about after the Kyoto Protocol was initiated... (If im not wrong)

Countries were given a specific quota on how much of carbon they can emit. And this carbon credit system helps maintain that quota.

The total emissions must still stay within the quota, but the credit system allows industries some flexibility and predictability in its planning to accommodate this.

More info here: http://en.wikipedia.org/wiki/Carbon_cred...

Answer 5

It doesn't.  It's like trying to lose weight by paying someone else to stop eating.

Answer 6

Exactly! Which is why Algore loves it. It makes him money without actually doing a ****ed thing about the actual problem. A PERFECT Liberal solution!

Answer 7

If 2 companies emit without restrictions then effect would be lot more -ve.

With some financial benefits attached the copmanies are encouraged to create lesser carbon emission

For more info you can try the link

http://science.howstuffworks.com/carbon-...

Answer 8

Carbon credit:

The Kyoto Protocol has created a mechanism under which countries that have been emitting more carbon and other gases of greenhouse gases (GHGs) have voluntarily decided that they will bring down the level of carbon they are emitting to the levels of early 1990s; thus carbon credits are generated by enterprises in the developing world that shift to cleaner technologies and thereby save on energy consumption, consequently reducing their GHGs.

A company has two ways to reduce emissions. One, it can reduce the GHGs (greenhouse gases) by adopting new technology or improving upon the existing technology by attaining to the newer emission norms. Alternatively, the company may tie up with developing nations and help them set up new technology that is eco-friendly, thereby helping developing country or its companies 'earn' Credits. India, China and some other countries have the advantage because they are developing countries. Any company, factories or farm owner in India can get linked to United Nations Framework Convention on Climate Change (UNFCCC) and know the 'standard' level of carbon emission allowed for its outfit or activity. The extent to which they are emitting less carbon (as per standard fixed by UNFCCC) they get credited in a developing country. This is called ‘carbon credit’. These credits are bought over by the companies of developed countries - mostly EU countries.

These arrangements are designed to allow individuals and organizations to reduce emissions directly or by participating in programs that, through various energy-conservation techniques and emissions-trading initiatives, attempt to achieve a net reduction in greenhouse gases.

For further information on environmental issues please refer

http://www.environmentengineering.blogsp...