Money from Carbon

Before we proceed, click here for an interactive map on global carbon footprint brought to you by National Geographic. As you can see, China is the world’s top contributor. It is evident from the recent events of pollution in China that are constantly in the news.

In a previous article on carbon footprint, we learnt how it is defined and measured. In this blog post you’ll see fundamentals of emissions trading.

What is emissions trading?

The three pillars of sustainability are economics, environment and society. The environment, our earth may survive without us humans but we definitely won’t survive without it, unless of course somebody finds another Earth.

The economic solution to the environmental issues i.e. GHG emissions, is a low carbon economy. Hence, under the Kyoto Protocol, three market based mechanisms were introduced. These are:

  1. Emissions Trading
  2. The Clean Development Mechanism (CDM)
  3. Joint Implementation (JI)

The market that uses these mechanisms is called as ‘carbon market’, where carbon is a currency. But hey! What about N2O? It has no carbon and it is definitely a greenhouse gas! The answer to this is that carbon dioxide is the principal greenhouse gas, hence people generally deal with carbon. Nevertheless, other greenhouse gases such as N2O are also traded but in certain geographical areas.

There are two ways to price carbon- carbon tax and carbon trading (cap-and-trade scheme). In carbon tax, when one pollutes, one pays a certain amount. In cap-and-trade i.e. emissions trading, a government sets a certain a limit or a cap on pollution emission over a particular industry and then the trading/auctioning begins. It then holds an auction where it sells emissions quotas (aka permits or allowances or carbon credits). Companies can then purchase a certain amount according to their needs. If a company manages to emit less than the amount purchased for, it can sell the unused permit to another company in need. Similarly, if a company emits more than it has once purchased for, it can buy more from companies that permits to give away.

The European Union emissions trading scheme is by far the largest carbon trading scheme in existence. If you are in the US and want to participate in emissions trading, click here.

Like any other currency, carbon trading units are tracked through registry systems and an international log maintains safe transfer of these units between countries.

How can I trade carbon as an individual?

Just as emissions trading is a way to offset carbon on an large scale, an individual can offset the carbon generated from transportation, electricity usage etc. For example, airlines sell carbon offsets when one purchases a ticket.

Where do I begin?

You can start from Carbon Gobblers. Here you will find out how much carbon you generate and hence in turn how much you can offset.

CarbonGobbler is an application brought to you from GreenHatters, available today on iPhones and iPad’s along with a strong web presence. A product created to enhance awareness of the associated carbon footprint in energy consumption and a tool to help conserve energy use. CarbonGobbler lets you monitor your carbon footprint, helps you with comparison of your energy use at intricate points of consumption in a home or office, providing users with pointers on how to potentially reduce energy consumption, and save money.

Next, find yourself a carbon provider here.

Come back and let us know your thoughts!