Carbon trading
Earlier this month, new legislation was announced aiming to reduce Europe’s emissions by 90% before 2040, with international carbon trading proposed to help achieve this.
What is carbon trading?
Carbon trading is a system where companies can buy and sell “carbon credits”. One credit equals one tonne of carbon dioxide (or the equivalent of a similar gas) removed from the atmosphere – in context this is roughly the amount of carbon dioxide released during a round trip flight between London and Tenerife. If a company emits too much, it can buy extra credits from another company that has reduced its emissions and has credits to spare. There’s usually a limit on how many credits each company gets, and that limit is lowered over time to help reduce overall pollution.
Who’s doing it?
55 countries currently have variations of this system, including the UK, Canada, China, Australia, Japan and the European Union. Plus, voluntary schemes mean individuals and companies can choose to offset their own emissions. This is most commonly seen when people travel and can donate to have trees planted or invest in renewable energy and carbon capture initiatives to balance emissions. It’s predicted the global voluntary carbon market will reach around $24bn by 2030.
What’s the benefit of it?
It’s incentivising both short-term and long-term efforts to reduce emissions. Some companies may not have the means or finances to immediately upgrade to greener practices or infrastructure, so this is a way they can be climate conscious in the meantime. For those selling credits, it’s raising funds to support innovation in sustainable technologies.
Are there any downsides?
Buying credits can help a company emitting more than their allowance avoid fines or other penalties, leaving some concerned that this means companies don’t feel they have to cut emissions themselves. Careful monitoring is needed to make sure the carbon trading system is fair and transparent for everyone, including local communities who could be affected by environmental projects.
The takeaway.
As more global governments develop environmental protection legislation, the carbon trading landscape is likely to grow. Through being mindful of our carbon footprint – including using handy calculators like this – and the green solutions used to offset emissions, countries, businesses and individuals can make a difference in Earth’s future.