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How to Measure and Price Carbon Credits

how to measure carbon credits

How to measure and price carbon credits is not knowledge everyone is familiar with, even those who are zealous about recycling and decreasing the amount of pollution that is emitted around our globe each day.

Carbon Dioxide

Carbon dioxide levels have increased globally since the industrial age. Due to the combustion of fossil fuels and deforestation, the concentration of carbon dioxide in the atmosphere has increased by nearly 35 percent since the beginning of the industrial revolution of the 1900's.

There is no way to get around it: almost every single item that we consume in our society today has been created by an industrial process. When these products are produced, greenhouse gas emissions occur. Some of the products created by a process that emits carbon include:

  • Cars and trucks
  • Clothes
  • Gasoline for vehicles
  • Electricity
  • Computers
  • Furniture
  • Food

What Carbon Credits Are

The idea for carbon credits came from the Kyoto Protocol of 1997. This is placing a monetary value on the cost of polluting the air. A credit is a measure representing one megatonne (a mass equal to 1,000 kilograms) of carbon dioxide. This is either saved from being emitted or removed from the Earth's atmosphere.

Basically, what these credits do are two-fold:

Selling Credits

At the Kyoto Protocol. emission quotas were agreed by each participating country. Most third-world countries did not have as high quotas as countries like Japan and the United States. The intention highlighted in this treaty was to reduce the overall emissions to 1990 levels by the end of 2012. It was stated that countries with high emissions levels can purchase carbon credits from nations that have less of a negative impact on the environment. The reasoning for this is to make an effort to offset the quantity of greenhouse gases released into the air.

The goal is to reduce the amount of carbon, or what is termed as carbon

footprints in our environment. Individual consumers as well

as commercial consumers can take part and buy credits. Individuals as well as companies learn how to measure and price carbon credits.

Pricing Carbon Credits

Carbon credits are a vital component of national and international emissions trading strategies that have been stressed to lessen global warming. They provide a way to reduce greenhouse effect emissions on an industrial scale. This is accomplished by capping total emissions every year and letting the market place a monetary value to any shortfall through trading. Credits can be exchanged between national and international businesses. Credits may also be bought and sold in international markets at the current market price. These credits can be used to finance carbon reduction schemes between trading partners.

The market price of carbon credits can be found at Carbon Planet. one of the leading carbon credit vendors. In 2007 this company was purchasing credits wholesale for $13.21 per credit. They were reselling them to companies at $21.25 per credit.

In Europe

In Europe, a tonne of carbon is 7.92 Euros which is about $11 USD. There are six exchanges that help companies buy and sell carbon credits and they are:

How Carbon Credits Save the Planet

The only way to avoid greenhouse emissions would be to live on a deserted island and not use any power or heat. No animals could live with you as methane from the waste of livestock contributes to the greenhouse effect. In fact, 1 tonne of methane is reported to be as damaging to the air as 21 tonnes of carbon dioxide.

How can we reduce the amount of gases that permeate the atmosphere? Every day scientists and environmentalists are trying to come up with new technology that is eco-friendly. Now that you are more aware of how to measure and price carbon credits, you can be active in saving our planet from damaging emissions. Children and adults alike can join in teaching those around them the importance of finding ways to decrease pollutants so that we can conserve our air and land.

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