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The Positive And Negative Features Of Carbon Trading

09.08.2009 · Posted in Business News Article

In view of the rising concerns over global warming and increasing carbon emissions into the atmosphere, many countries and non-governmental organizations have started working upon more effective means to reduce pollution. Carbon offset and carbon trading are two of the most effective techniques being adopted for achieving this.nnBusinesses buy carbon credits that are available in the market in the carbon trading system. The credits allow businesses to go above their prescribed quota of greenhouse gas emissions and not face a heavy fine for doing so.nnThe main benefit of the carbon trading method is the encouragement that it gives for emitting lower amounts of gases. The objective is to make organizations understand that the price of carbon credits is a lot more than the cost of adopting eco-friendly ways of doing business. If the company is forced to shell out money for emitting the gases then it would try to use greener methods to score over other organizations. As more and more businesses opt for this approach, the total emission levels around the globe will decrease progressively, thereby protecting the environment.nnAnother significant benefit of carbon trading is that it works on a free market system where any firm can purchase or sell carbon credits. This system does not involve any government interference such as collection of fines or framing local regulations, which enhances its efficacy.nnThe biggest problem however with carbon trading is that an international structure for trading is yet to be formulated. As the transactions are carried out on an international level largely, it becomes hard for a regional company to engage in the system on a continuous basis.nnA few businesses are reluctant to opt for this method, as they do not want to make expenditure that cannot be transferred to their products’ end buyers. In addition, it is very tough for small companies to get the sophisticated machinery or devise new ways to reduce the amounts of greenhouse gases emitted by them. As a result, the smaller companies are made to repeatedly buy carbon credits in this model which leads to decreasing of their capability to compete with bigger corporations.

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