The Carbon Trading Game
Carbon has become a commodity of sort, as a result of the action by a number of countries to punish and reward companies in terms of carbon emission. Business organisations acquire carbon credits if they have to release pollutants so as to continue their normal procedures. This produces a carbon trading market, whereby business organisations can buy carbon credits from other corporations enable them to emit pollutants into the air.
Carbon trading came along because of global environmental awareness that forced authorities to come up with steps to lessen carbon discharge by business entities. So as to force business entities to lessen their carbon emission, thereby mitigating the effects of air pollution, authorities agreed through the Kyoto Protocol to place a limit on the quantity of carbon that a business is allowed to discharge to the atmosphere. This cap will then diminished gradually as the corporation adopts greener operations to keep off fines.
Carbon is set as the standard for quantifying greenhouse gases. It can mean carbon dioxide, although it can mean methane or another greenhouse gas in carbon equivalent. Once a corpotation invests in greener operations, it tends to keep more carbon credits. These carbon credits may be traded with other companies with very little carbon credits left to continue operations according to environmental laws. The carbon credit market price is set according to factors such as the overall carbon credit cap.
The key aim of the Kyoto Protocol is to diminish harmful gas emissions by exacting fines. Businesses are to realise that not altering their systems to have them abide by environmental criteria would translate to added operational costs. To mitigate costs, companies would turn to greener operations.
Numerous environmetalists, however, do not trust the carbon trading arrangement would work for the environment. They argue that companies will probably try to get away with contaminating the air by simply buying credits, raising product prices, leading to economic issues. Several businesses argue that it is not right for them to be competing with other businesses in nations with less stringent carbon caps.
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