Considering the growing concern about global warming and increased carbon emissions into the air, governments and other agencies are trying to find viable alternatives to lower pollution. Carbon offset and carbon credits trading are some of the methods that are being practised for resolving this problem.
In carbon trading, carbon credits are purchased and sold in the market by businesses. The credits allow companies to go beyond their permissible quota of greenhouse gas emissions and not face the burden of a penalty for doing so.
The main benefit of the carbon trading method is the motivation that it gives for releasing less amounts of gases. The idea is that businesses will discover that opting for greener methods of doing business is more gainful than paying for carbon credits. If a firm has to pay for polluting the air then it will try to embrace ways that are less polluting if it wants to stay competitive. As more and more businesses adopt this approach, the total emission levels around the globe will go down progressively, thereby saving the environment.
Another important advantage of carbon trading is that it is based on a free market system where any company can purchase or sell carbon credits. As it does not involve any direct government interference to impose penalties or to create local rules, this method is more successful.
The biggest disadvantage of carbon trading is lack of an all encompassing and structured global system for its trade. Since majority of trade in carbon credits happens in the global market, it is troublesome for regional organizations to make use of this system.
There is some resistance from a few companies towards this method as the costs incurred during carbon trading cannot be included in the final selling price of products. Moreover, many small companies are not able to incur the expenses required for buying new equipments and adopting new processes to lower their emissions. As a result, the smaller businesses are forced to continuously purchase carbon credits in this model which leads to decreasing of their capability to compete with bigger organizations.
In carbon trading, carbon credits are purchased and sold in the market by businesses. The credits allow companies to go beyond their permissible quota of greenhouse gas emissions and not face the burden of a penalty for doing so.
The main benefit of the carbon trading method is the motivation that it gives for releasing less amounts of gases. The idea is that businesses will discover that opting for greener methods of doing business is more gainful than paying for carbon credits. If a firm has to pay for polluting the air then it will try to embrace ways that are less polluting if it wants to stay competitive. As more and more businesses adopt this approach, the total emission levels around the globe will go down progressively, thereby saving the environment.
Another important advantage of carbon trading is that it is based on a free market system where any company can purchase or sell carbon credits. As it does not involve any direct government interference to impose penalties or to create local rules, this method is more successful.
The biggest disadvantage of carbon trading is lack of an all encompassing and structured global system for its trade. Since majority of trade in carbon credits happens in the global market, it is troublesome for regional organizations to make use of this system.
There is some resistance from a few companies towards this method as the costs incurred during carbon trading cannot be included in the final selling price of products. Moreover, many small companies are not able to incur the expenses required for buying new equipments and adopting new processes to lower their emissions. As a result, the smaller businesses are forced to continuously purchase carbon credits in this model which leads to decreasing of their capability to compete with bigger organizations.
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