A Quick Guide to Carbon Credits

carbon creditsOne of the most important tools of environmental management is the environmental law. How to protect the environment effectively have always been an issue – and a legal issue for that matter – which is why many countries carry out this environmental management thing seriously. After all, the environment is where natural resources like forest, land, air, and water comes from.

Compliance with the environment law on paper does not really mean anything as this is really ineffective. Regulation through the use of market-based instruments is perceived as more helpful as it helps reduce pollution and emissions. Adding such regulation to the social responsibility of industries helps make the environmental law more effective. Of course, to be more effective, there should be a command and control style with such regulations being issued.

Market-based instruments being used for environmental policies encourage changes in technology. Financial incentives being given like subsidies, tax cut, and market creation results in the changes in behavior of different industries, often all for the better. MBI essentially makes use of market and price mechanism as this encourages industries, businesses, firms, and homes to adopt a more environment-friendly practice. Instruments vary from taxes on pollution to product charges as well as differential tax rates.

The most effective of all market-based instruments being used is the Carbon Credit. Carbon credits are basically the permit to emit carbon dioxide carbon credits are awarded to groups or countries when they have reduced greenhouse gas emissions that is lower that their quota. The main goal of this is to stop the unnecessary increase of CO2 emissions that contributes to greenhouse gases.

These days, carbon credits have become very important as they have become part of national as well as international trading structures. The use of such system in the controlling of carbon emissions has become an effective way in reducing the greenhouse effect that many industrial, homes, and businesses create. Through the capping of yearly emissions, a country is able to lower their carbon dioxide emission. Since carbon credits are tradable, businesses and even countries can trade carbon credits should they need to use more of it based on the production of CO2 they have. It is a medium that helps break boundaries not just between businesses, but also countries. By placing a price on the pollution you make, the world essentially becomes a better place.