Carbon emissions are believed to contribute greatly to climate change, and many companies have taken action to mitigate these emissions as a result. Unfortunately, mitigation isn’t always a solution as some vital industries must emit carbon to function and sustain modern society. In situations where mitigation is not possible, carbon emission trading looks to be a solution.
What is Carbon Trading?
Carbon trading is a system by which companies that emit carbon purchase credits. These credits represent a certain amount of carbon the company can emit each year. If a company does not need to emit as much carbon one year compared to a previous year or does not end up emitting as much carbon as originally planned, that company then has a surplus of carbon allowance.
Another company, however, may find that it needs to emit more carbon than it had purchased credits for. Under a carbon trading system, the company with surplus credits can trade or sell its credits to the company that needs to emit more carbon.
The goal of this kind of scheme is to create a carbon-neutral environment. Since the original company isn’t using its credits because it isn’t emitting as much carbon as originally planned, trading these credits offsets the extra carbon emitted by the company buying the credits. All of this is predicated on planning by regulators for a certain amount of carbon emissions each year, but under such a setup, this does cancel out excess carbon.
Does Carbon Trading Help the Environment?
While it’s believed that carbon trading is beneficial to the environment, more research and testing needs to be done. Researchers continue to study the impact of carbon emissions on the planet, and mitigation methods and carbon trading schemes may take decades to show results.
For now, preliminary data shows a positive benefit, but whether this type of arrangement will be beneficial long term remains to be seen. There are many variables involved in climate change, and carbon is only one influential factor.
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