Carbon Credits Explained

The inconvenience of the sky being darkened is nothing to the lasting effects of all the carbon being thrown into the atmosphere and radically changing our climate by trapping the heat from the sun (once the clouds of ash have disappeared).

Science has correlated climate over the ages with core samples from ice sheets and found that carbon dioxide levels fluctuate with climatic events. Only recently has science been able to understand how this CO2 actually works to trap the heat in the atmosphere and by calling it the greenhouse effect gives us the basic understanding of what goes on.

Other gases are also responsible for containing the heat of our planet and some are far worse that CO2. See http://ghg.unfccc.int/index.html which shows that methane’s Global Warming Potential (GWP) is much higher than CO2. However, since CO2 is the main contributor to the effects of Global Warming the GreenHouse Gases are known collectively as CO2 emissions.

The good news is that the process of reducing pollution from CO2 emissions is well under way. It has got to be the most important thing for mankind to address as history has shown us the certain conclusion. The US government is not so sure that CO2 is responsible for all of the global warming although California is one of the states taking the opposite stance by aggressively promoting everything to do with the use of renewable resources. Russia agrees that CO2 is in its sights (it signed the Kyoto Protocol in 2004) but is unfortunate in having a massive and old infrastructure that will take time to upgrade.

To reach this point in discussions between nations, the countries that form the world’s major polluters were identified from global CO2 emission statistics based on 1990 figures. At the meeting in Kyoto in 1997, China and India were therefore not significant polluters and the outcome was that those nations deemed responsible for significant CO2 emissions were given targets to reduce them. The US have used the non-inclusion of China and India as its reason to stay out of the Kyoto Protocol.

What emerged from the Kyoto meeting is that as each country produces CO2, it must be able to contain that CO2 by tree-planting or other processes that can absorb it, such as sequestration and changing farming methods. Or it can reduce the CO2 it produces in the first place. If that country produces more CO2 than it can absorb, it must purchase an ‘absorption ability’ from another nation. The Carbon Credit is this new currency and one Carbon Credit is equal to one Tonne of CO2 and is called a CO2e (CO2 equivalent). A nation might have a shortfall in absorbing 500,000T of CO2 and according to the Kyoto agreement it must seek to purchase those from another nation that has been planting trees for such a consideration. Costs are between US (ironically) $10 – 40 per credit.

It’s pretty simple really in theory. All growing things absorp carbon which ultimately ends up in the soil. Planting trees reduces the carbon in the atmosphere but not if they are then cut down and burnt and crops that are planted and harvested will not actually store carbon within them. Long term plans are needed. Crops can be farmed in such a way that the soils are not ploughed to let the stored carbon escape. Weeds and borders to fields can be encouraged. Forests can be left to stand. Fuel usage can be cut and power generation can be more efficient and all this reduced consumption of carbon will mean that less carbon credits will have to be purchased.

The money that purchases carbon credits will ultimately be used to give grants to further carbon saving schemes. New Zealand has already funded some wind generation projects from the money gained from selling carbon credits. Ireland has recently purchased 95% of its carbon credits from overseas to offset the millions of tons of CO2 its industries will develop for the forthcoming year. The other 5% will come from internally as they have new practices of farming and been planting trees since 1990. Some treebound countries do not necessarily have loads of carbon credits to sell as they have not made any attempts to increase the number of trees since 1990. There are complications to be conquered though. In Australia, Virgin has tried to introduce it's airline but has been deterred by the need to offset it's CO2 pollution by the purchase of Carbon Credits which makes them uncompetitive.

A global market may become less global if the cost of a product is measured in terms of total CO2 emissions. The end result will be that we may all be seeking to trade locally. Along with our new found local power generation facilities we may see a shift away from massive corporations and move back towards co-operatives. Made in China might be something people in Europe see less of. Alternatively, goods could be moved around the globe super efficiently and only the large corporations will be able to afford this.

The ramifications of the Kyoto Protocol are that it will affect the way we measure the cost of items. The development and fine-tuning of the terms of the Protocol are to be introduced in 2008 and it may seem to be a huge headache for businesses and governments alike. However, remember the certain conclusion.