The carbon credit market is one of the main tools used to combat climate change and promote sustainability. In this modality, companies and governments that emit greenhouse gases (GHG) can offset their emissions by purchasing carbon credits from projects that promote the reduction or removal of these gases from the atmosphere.
The functioning of the carbon credit market is based on a system of exchange of credits that are issued by projects to reduce emissions of greenhouse gases, such as wind, solar, hydroelectric, reforestation, among others. These credits are traded on stock exchanges and can be purchased by companies wishing to offset their own greenhouse gas emissions.
Carbon credits are issued for projects that are certified by regulatory entities, such as the UN's Clean Development Mechanism (CDM), and that prove the reduction or withdrawal of greenhouse gases from the atmosphere. Each credit is equivalent to one ton of carbon dioxide (CO2) equivalent that was not emitted into the atmosphere.
Prices of carbon credits can vary according to supply and demand, and are influenced by factors such as government regulation, economic performance, and targets for reducing greenhouse gas emissions. In general, the more stringent the emission reduction targets, the higher the price of carbon credits.
The carbon credit market has expanded significantly in recent years, with more countries and companies joining the system. Some companies already include in their business strategies the purchase of carbon credits as a way to mitigate their environmental impacts and demonstrate their commitment to sustainability.
Like this article? Share your thoughts with us in the comments below and join the conversation!
Comments