For awhile the concept of a “carbon credit” has baffled me. In the economic market can companies really sell off their waste to the highest bidder? Does this trade of waste and sustainability really benefit the earth, or is it an economic scapegoat for companies who don’t want to put forth the effort to make their processes greener?
When we look at carbon credits we have to consider two things, the electricity a certain type of energy produces and the pollution. Whereas electricity produced by fossil fuel creates both pollution and energy, the electricity produced by say, wind energy, creates just electricity. To balance out the green method of energy with dirtier methods, an immaterial “carbon credit” is also said to be produced. This indicates the amount of pollution prevented by using alternative energy sources.
Credits can be contracted through using alternative energy sources, energy conservation, or even environmental conservation. In any case, a credit is an economic measurement of a company or nation’s ability to reduce emissions. In the economic markets these credits become tradable. When companies survey the cost of applying new, more eco-friendly technologies verses paying other companies to produce the carbon credits they would have created with the new technologies, they can determine if the adaptation is worth it.
This is where the buying and selling of credits comes in. A company- or a country in the case of the 1990 Kyoto treaty- may be mandated to reduce their carbon output by so many tons per year. If the company finds it more economical to outsource their credits to smaller companies who will contract them, this is done.
So do credits really help the environment? In many cases they are an easy way for companies to continue using their pollution-causing technologies without having to contract taxes for excess pollutants.
While laws enacted to decrease the amount of pollution a company causes are well worth it, it is the trade of carbon credits an easy way out of this? Wouldn’t it be more efficient in the long run for companies to simply spend the excess money in order to better their production and eventually cheapen their costs anyway?
The carbon credit system seems inherently flawed by allowing one company to adopt more friendly technologies and profit from another company who does not. Perhaps it is good business for the eco-friendly industry out there, but in the end it becomes debatable whether “carbon credits” are a correct measure for sustainability.
