Carbon

Rafael Morales Moreira
International Finance and Capital Market
February 15, 2007
Carbon Credits
      In a time of rising technology and increasing population, demands on the environment are continually being pushed to new levels. As a result, it becomes important for us to expand our knowledge about the environment and take appropriate actions to protect this element of most importance to human existence. One component of our environment experiencing some of the greatest abuse due to humans is the air. Air pollution has been on the rise ever since the beginning of industrialization. The climbing number of factories and use of cars worldwide are the major culprits of this environmental hazard. There are various gases released into the air that can be considered air pollutants, but one of the most common and dangerous to the environment is carbon dioxide (CO2). As the environment encounters damage from increasing levels of carbon dioxide, actions on both governmental and individual levels need to be implemented in order to protect the welfare of future life. In order to protect the environment from the threats that carbon dioxide brings Carbon Credits are now being used as a system that will reduce the environmental hazards.
      Carbon credits are certificates awarded to countries that are successful in reducing the emissions that cause global warming. For trading purposes, one credit is considered equivalent to one ton of carbon dioxide emission reduced. Such a credit can be sold in the international market at a market rate. The trading can take place in open market. Developed countries that have exceeded the levels can either cut down emissions, or borrow or buy carbon credits from developing countries. The Concept of Carbon credit came into existence as a result of increasing awareness on the need for pollution control. It took the formal form after the international agreement between 141 countries, popularly known as Kyoto Protocol.
      What emerged...