subject: Carbon Effort - Cap And Trade Carbon Credits [print this page] Carbon credits are valuable aspects that must be considered in biogas projects that mitigate large volumes of biogas. The approach used to control pollution by way of providing economic incentives for achieving reductions in the emissions of pollutant is known as emissions trading or cap and trade. How, then, do we can and trade carbon credits?
Well, there is a central authority that sets a cap on the amount of a pollutant that can be emitted. These caps are allocated to firms in the form of emissions permits. In exchange for the right to emit a certain volume of a specified pollutant, these firms should now balance the cap and their credits. These firms, though, have the capacity to sell their credits if they feel that they have more than enough, or to buy credits from other firms. This transfer of credits from one firm to another is called a trade.
The larges active trading program for greenhouse gases is the European Union Emission Trading Scheme (EU ETS). This cap and trade system is similar to the Kyoto Protocol of the United Nations Framework Convention on Climate Change. Although different countries have different quotas within the European Union, overall, the trading program has committed to reducing its greenhouse gas emissions to as least twenty percent below 1990 levels by the year 2020.
Previously mentioned is the Kyoto Protocol, which states that as each country produces carbon dioxide, it must also be ale to contain that CO2 by planting trees or engaging in other processes that can absorb it like sequestration and changing farming methods. Any country that produces more CO2 that it can absorb must purchase absorption ability from another nation, giving birth to cap and trade carbon credits, as well as the cap and trade system.
The ETS cap and trade system puts a cap on the amount of emissions that both a country and various entities within it may emit.
