Carbon credit

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MANI.

MANI. (Querist)
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26 April 2012 dear sir

what is carbon credit

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 April 2012 It has been established through numerous scientific studies, that emissions generated by human activities are resulting in climate change and increase in global temperatures, with potential catastrophic impacts.
Envisaging this threat to the global society, one of the milestones was the adoption of Kyoto Protocol in Kyoto, Japan, on 11 December 1997. The major feature of the Protocol is that it sets binding targets for 37 industrialized countries and the European community, for reducing greenhouse gas (GHG) emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012. International negotiations are currently underway to evolve a global carbon market with more ambitious emission reduction targets.
Under the Kyoto protocol, countries must meet their targets primarily through national measures. However, it offers them an additional means of meeting their targets by way of three market-based mechanisms thereby creating what is now known as the 'carbon market':
Emissions trading
Clean development mechanism (CDM)
Joint implementation (JI).
Carbon Markets have become one of the fastest growing markets in the world. Their worth expanded to US$ 176 billion in 2012 from US$ 10 billion in 2005. Estimates predict a potential of up to US$ 1 trillion by 2020.

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CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)
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27 April 2012 In simple terms (Copied from other site)

i) Carbon credit at the first place has to do with the reduction of emission of carbon-di-oxide which is the main cause for green house effect also called as global warming.

ii) Developed nations emit more CO2 than developing nations due to high industrialization. These days with booming economy several developing nations too have started to emit a lot of these so called green house gases. This pollution is very detrimental to our very existence.

iii) In order to safe guard the interests of one and all the concept of carbon credit was introduced, where in, for e.g. developed nations can assist developing nations with reducing the pollution levels by transfering state-of-the-art technology to reduce pollution. The amount of emission gases reduced in this countries can be taken as a credit by the donor (technology) country.

iv) With this credit the companies from the developed countries can either emit more than the permissible limit in their own country or purchase more rights for emission elsewhere.

v) The significance of carbon credit is a win-win situation for one and all in the business world and reducing pollution for preserving biodiversity on planet earth in general.

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