#Emission Credits and CO2 Reduction Certificate in 3 minutes
[Sounds fishy ???]
This is for those of you who may think .. .
"A certificate that proves that you have reduced CO2? Sounds pretty fishy. Well Ive heard of Emission Trading but I dont understand the details very well."
You know that Climate Change is the biggest problem that mankind faces. It is caused by burning fossil fuels which raises the concentration of CO2 in the atmosphere which then enhances the Green House Effect. Ice will melt and sea levels will rise and the poor old polar bear will .. .
Sorry you know all of that. That kind of information is all over the place. Global Warming this, Climate Change that .. Ill get right to the point.
It just means we need to start reducing CO2 emissions.
The international community is tackling this problem and seeking ways to reduce CO2 emissions. Emissions Trading is one of those methods that will achieve this outcome.
It means that you can trade "The right to emit CO2" just as you could trade Gold, Oil or Stocks.
The following is a simple explanation.
[Creating Emission Credits]
Lets say for instance there was a plan to build a coal fired power plant in a developing country. Of course it will burn coal and is estimated to emit 100XXX tons ( A LOT ) of CO2.
Not good at all, is it? We already have enough CO2 emitters which means that this plan just worsens the problem.
"Lets scrap this plan. But wait a second. These guys just want electricity in their homes. OK lets generate electricity by wind power. It costs more than a coal fired power plant but it only emits 1XX tons ( A LITTLE) of CO2 every year."
So by adopting the wind power method it can be said that choice has reduced a lot of CO2 that would have been emitted in the future. And that fact can be sold as a "CO2 that we did not emit" Right.
At this point this is still a "CO2 that we did not emit" Right.
[Buying Emission Credits]
So who is going to buy this "CO2 that we did not emit" Right?
There are countries and companies that will be fined or punished if they cannot meet the CO2 reduction targets that they have agreed to keep.
Are receiving punishments or fines the only sanctions for non compliance?
The answer is No. There is a rule where you can buy "CO2 that we did not emit" Rights and offset the excess amount. It means that you can emit more CO2 but you can always pay your way out of it.
This is how the "CO2 that we did not emit" Right changes its form into "CO2 that we can emit" Right and used.
It might sound strange but if the total target is met, it means that they have reduced CO2 emissions rather than doing nothing. It also has a strong meaning in that at least it is a step toward a framework and consensus in the reduction of CO2 emissions.
[What is a CO2 Reduction Certificate?]
Under these circumstances what is a CO2 Reduction Certificate?
In one word, it is a Certificate that proves that "you have disabled some Emission Credits".
In the current situation, an Emission Credit sold will be bought by an entity with a purpose to use that credit to justify its excess emission. In this case the Emission Credit will be used as a "CO2 that we can emit" Right.
If an Emission Credit is used in this way it means that CO2 is eventually emitted.
On the other hand a CO2 Reduction Certificate will disable the specified amount of Emission Credits so that nobody can use them to justify their emission surplus.
In other words it means that your money has been used to promote natural energy projects that reduce green house gas emissions through the Emission Credits that you have disabled.
We only uses high quality credits that are certified by the UN for CO2 Reduction Certificates. The Rights of the Credits are also disabled BEFORE they are handed to you as certificates. This way you can be sure that you have reduced a meaningful amount and assisted in tackling Climate Change.
A positive move, wouldnt you agree?
[A Final Word]
That was the rough explanation of Emission Credits and the meaning of a CO2 Reduction Certificate.
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