Considering the growing concern about global warming and increased carbon emissions into the atmosphere, national administrations and other agencies are looking for viable alternatives to lower pollution. Carbon offset and carbon credits trading are some of the methods that are being practised for dealing with this issue.
Carbon trading deals with companies purchasing carbon credits from the market. These credits decide the amount of greenhouse gases that companies can release above their allotted quota without incurring a fine.
The main benefit of the carbon trading method is the encouragement that it gives for releasing lower amounts of gases. The idea is that companies will discover that adopting greener processes of carrying out business is more gainful than paying for carbon credits. If the firm is forced to spend money for emitting the gases then it would attempt to use greener methods to stay ahead of other companies. With the number of companies that follow this system rising, the amount of overall emissions by nations will decrease, thus making the environment cleaner.
Another significant advantage of carbon trading is that it works on a free market system where any company can buy or sell carbon credits. Due to non interference from the local administrations such as imposition of fines or creating regional legislations, this system is quite successful.
The greatest drawback of carbon trading is absence of a comprehensive worldwide structure for trading. As almost all of the trading happens in the international markets, it is hard for some local businesses to follow this system.
There is some resistance from a few companies towards this approach as the costs incurred during carbon trading cannot be passed on to the customers. In addition, it is quite difficult for small businesses to get the sophisticated machinery or devise innovative means to reduce the amounts of greenhouse gases released by them. Therefore, they are caught in a position that forces them to incur the costs of carbon credits continuously and thus they lose out in the race against larger organizations.
Carbon trading deals with companies purchasing carbon credits from the market. These credits decide the amount of greenhouse gases that companies can release above their allotted quota without incurring a fine.
The main benefit of the carbon trading method is the encouragement that it gives for releasing lower amounts of gases. The idea is that companies will discover that adopting greener processes of carrying out business is more gainful than paying for carbon credits. If the firm is forced to spend money for emitting the gases then it would attempt to use greener methods to stay ahead of other companies. With the number of companies that follow this system rising, the amount of overall emissions by nations will decrease, thus making the environment cleaner.
Another significant advantage of carbon trading is that it works on a free market system where any company can buy or sell carbon credits. Due to non interference from the local administrations such as imposition of fines or creating regional legislations, this system is quite successful.
The greatest drawback of carbon trading is absence of a comprehensive worldwide structure for trading. As almost all of the trading happens in the international markets, it is hard for some local businesses to follow this system.
There is some resistance from a few companies towards this approach as the costs incurred during carbon trading cannot be passed on to the customers. In addition, it is quite difficult for small businesses to get the sophisticated machinery or devise innovative means to reduce the amounts of greenhouse gases released by them. Therefore, they are caught in a position that forces them to incur the costs of carbon credits continuously and thus they lose out in the race against larger organizations.
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