By buying in carbon credit, you and your business get the permission to omit one ton of carbon dioxide or any other greenhouse gas into the environment. These credits are usually bought and traded by businesses Who have to use carbon related gases in their business process. Carbon credits are traded in order to sponsor environmentally friendly projects around the globe which help reduce carbon in the environment.
Carbon credits are used by businesses which cannot survive without creating some amount of carbon emission. The requirement to purchase carbon offsets is made to penalize those businesses and get sponsorship for green projects.
Trading Carbon Credits
You can trade carbon credits both on private and public platforms. These credits can also be traded internationally. The cost of these credits are purely dependent on supply and demand. Therefore, due to the supply and demand gap in some countries, the price of these credits can vary.
You can also trade carbon credits as an investor and earn some money. Usually, businesses buy and sell these credits to offset their carbon footprint and become carbon neutral. You can explore a few exchanges online which allow the trading of carbon credits.
So, if your business emits carbon, you will have to invest in a specific amount of carbon credits in order to offset your carbon emissions. Depending on local laws in the area your business operates, you might also be legally required to purchase carbon credits.
Types of Carbon Credits
- Voluntary Emissions Reduction credits are exchanged in the over-the-counter market.
- Certified Emissions Reduction credits are created by regulatory bodies so companies can buy them and offset the carbon footprint of specific projects. This process requires a third party to certify the credit exchange as well.
These were the two types of carbon credits, and how you can effectively use them to offset your carbon footprint.