Carbon Credits

Carbon credits are a key component of global efforts to mitigate climate change by incentivizing reductions in greenhouse gas emissions. Each credit represents the removal or reduction of one ton of carbon dioxide or its equivalent in other greenhouse gases from the atmosphere.

These credits are traded on carbon markets, where businesses, governments, and organizations can buy and sell them. Companies can earn this by investing in renewable energy projects, implementing energy efficiency measures, or engaging in reforestation and afforestation efforts.

The concept behind carbon credits is to create a financial incentive for reducing emissions, thereby encouraging a shift towards cleaner and more sustainable practices. This market-based approach allows industries to meet regulatory requirements or voluntarily offset their carbon footprint beyond regulatory mandates.

Carbon credits play a crucial role in achieving international climate goals, such as those outlined in the Paris Agreement, by fostering global cooperation and encouraging investment in low-carbon technologies and projects. They provide a mechanism for countries and businesses to contribute to emissions reductions on a global scale, regardless of geographical location.

However, This also face criticisms, such as concerns over additionality (whether projects would have happened anyway) and the potential for carbon offsetting to overshadow the need for direct emissions reductions. Despite these challenges, carbon credits remain a significant tool in the broader strategy to combat climate change by reducing greenhouse gas emissions worldwide.