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Carbon Credits

Carbon credits are a part of a proposed cap and trade system that is working its way through congress. In the proposed system, the cap refers to placing a maximum allowed level on allowable carbon emissions for different industries. This cap would gradually lower as years go by to force industries to lower their carbon emissions.

The trade portion of a cap and trade system is where carbon credits come in. As players within an industry take on and complete projects that lower their carbon emissions, they would be issued credits for the carbon they are not using. One credit would be worth 1 ton of carbon emissions. The credits could be traded on the stock market, much like commodities such as cattle, gold, and oil are today.

This would allow industries that are struggling to make commitments to essentially buy their way out of having to adapt. However, their money would be going to businesses that are adapting, so in essence you could have oil companies that are over polluting paying for other industries, such as computer hardware manufacturers, to go green through their monetary support. It’s not a perfect solution to the issues facing our world, but it would be a market driven approach that may satisfy many of the pro-business politicians that currently blockade the road to change.

 

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