Carbon Credits Explained

As the years progress, more and more people are becoming aware of the detrimental effects their lifestyles have on the environment. They’re trying to reduce their carbon footprint by driving less, turning off lights when they leave rooms, and making other everyday choices that help keep our planet healthy and hospitable to humans as well as animals and plants alike. In recent years, countries worldwide have begun implementing schemes to reward people who take these steps by issuing carbon credits to citizens or companies that help reduce the amount of harmful carbon dioxide in the atmosphere.

What are Carbon Credits?

Carbon credits are a type of carbon credit used to regulate greenhouse gas emissions. Carbon credits are a market-based mechanism for controlling pollution by providing economic incentives for achieving reductions in greenhouse gas (GHG) emissions. There are three main types of carbon credits: 1) Verified Emission Reductions (VERs), 2) Certified Emissions Reductions (CERs), and 3) EUAs or Emission Allowances.

How Does it Work?

In 2009, carbon credits were created with The United Nations Framework Convention on Climate Change’s Clean Development Mechanism (CDM). This program was designed to create a way for rich countries to help offset their greenhouse gas emissions. A country or company could produce an emission reduction project in a developing country and receive credits for that project. These CDM credits are then used by these companies and countries as a form of carbon payment — or offsetting — against their total annual emissions.

The Players Involved in the Market

The key players involved in developing and using carbon credits are appliance manufacturers, government agencies, nonprofit organizations, and consumers. Appliance manufacturers design energy-efficient devices and market them to consumers with a corresponding amount of carbon credits. Because energy-efficient appliances use less fuel than conventional products, it takes fewer carbon credits to meet regulatory emissions standards. So for every appliance purchased by a consumer or business deemed green, a set number of carbon credits will be issued. This can be used to purchase goods or services offered by another manufacturer whose practices might produce more harmful emissions than your own.

And Why Should I Care?

Indoor air pollution is a growing problem around the world. It is estimated that, worldwide, over two million people die prematurely each year due to indoor air pollution — roughly as many people who die in traffic accidents every year! The problem is especially bad in developing countries, where people often cook on wood or charcoal stoves inside their homes. When you heat or cook something in your oven at home, it’s not easy to imagine all of that soot and smoke going into your kitchen and collecting on your favorite dinner plates.

Moving Forward

To protect your home or business and improve your overall health, investing in a quality stove that burns clean is one of several actions you can take. It’s important to remember that switching from a conventional oil or gas stove to a high-efficiency natural gas or propane model isn’t enough by itself. Your new stove still emits greenhouse gases, albeit at lower levels than older models.