Carbon credits have emerged as a powerful instrument to incentivize and support carbon reduction efforts. As businesses strive to reduce their carbon footprints and meet sustainability goals, carbon credits offer a mechanism for financing and validating emission reduction projects. In this article, we will explore what carbon credits are, how they function, and why businesses should actively participate in this market.
What are carbon credits?
Carbon credits are essentially a unit of measurement that corresponds to one metric ton of carbon dioxide (or its equivalent in other greenhouse gases) reduced or removed from the atmosphere. These credits are generated by projects that undertake activities contributing to emission reductions, such as renewable energy installations, energy efficiency upgrades, or forest conservation. By purchasing and retiring carbon credits, businesses effectively offset their own emissions and support projects that make a positive environmental impact. Effectively, your business will be investing in projects that work directly against climate change while also satisfying government policy.
How do they work?
Carbon credits operate within a cap-and-trade or emissions trading system. Governments or regulatory bodies set a limit (cap) on total emissions, and businesses receive a specific number of emission allowances. Companies that exceed their allocated allowances can purchase carbon credits from projects that have surplus credits. This means that these credits can then be used to offset your business’ excess emissions, meaning your business will be compliant with government regulations while also receiving goodwill. A win-win scenario!
Why you should participate in the carbon credits market:
There’s several reasons why you, the business owner, should participate in the carbon credits market :
1. Firstly, it allows your company to achieve sustainability goals by effectively offsetting your emissions and eventually helping you achieve net zero emissions.
2. Secondly, purchasing carbon credits indubitably boosts the image of your organisation and demonstrates a genuine commitment to climate action. This’ll be helpful in attracting environmentally conscious customers and investors who value sustainable practices.
3. Lastly, engaging in the carbon credits market means there’s the potential to make more money through additional revenue streams through the sale of surplus credits or by developing emission reduction projects, allowing you to transform yourself from a market buyer to market seller, and eventually, a market player.
How we can help you :
PlanetWise is a team of supply chain and sustainability professionals, providing integrated carbon management solutions and consultancy services. We offer carbon credits and costing services that will allow you to offset emissions, build a reputable brand as a sustainability leader and most importantly, ensure that your company remains compliant with government regulations while also working towards a sustainable future! Read about our plans to learn more about how we can help.