The Role of Carbon Credit Marketplaces in Sustainability Efforts
The 1997 adoption of the Kyoto Protocol ushered a new era of sustainability and ended reckless environmental pollution on a global scale. Since that moment, all governments have embarked on CO2 emission control and have been working on the tools to measure and cap industrial emissions. These efforts have led to the creation of carbon credits — a unit of measure equal to one ton of CO2 emissions (CO2e) — representing a tradable unit of exchange in Green Finance.
Defining Carbon Credits
By definition, a carbon credit is a tokenized unit of CO2 emissions, fungible and exchangeable on various trading platforms. With carbon credit tokenization, businesses exceeding their cap of CO2 emissions have received a unique opportunity to purchase the excess CO2 credits from eco-friendlier businesses that have not exhausted their CO2 cap. This way, the amount of CO2 emissions remains stable, redistributed between less and more sustainable businesses.
Types of Carbon Credits
Depending on the type of use, carbon credits may be:
- Mandatory. These ones are used in CO2-intensive industries, where manufacturing enterprises unable to curb their CO2 emissions are forced to buy carbon credits from eco-friendlier companies to avoid fines.
- Voluntary. These credits (often referred to as carbon offsets) represent negative credits businesses attain via adopting eco-friendly, low-carbon technologies. As a result, these businesses manage to achieve a negative CO2 balance and sell those offsets to other businesses, thus compensating for their high CO2 emissions.
2023 Trends in the Carbon Trading Market
What should various stakeholders expect from the carbon trading market in 2023? Here are the top trends to watch out for:
- Rising demand for carbon credits
- Net zero and carbon neutrality goals
- Insetting within complex supply chains
- Carbon removal initiatives
- Closer partnerships between businesses and regulators
Wishing to learn more about carbon credits and how web3.0 moves the carbon trading business forward?
Read the full article following the link: https://4irelabs.com/articles/carbon-credit-market-overview/
