Understanding Carbon Credits And Carbon Offsets

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As you can see by this world map a few countries have signed the Paris Agreement and the others have all ratified this.

What does being ratified mean?
Ratify means to approve or enact a legally binding act that would not otherwise be binding in the absence of such approval. In the constitutional context, nations may ratify an amendment to an existing or adoption of a new constitution.

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Over the coming years these will be terms we will hear about daily as they will take on a very important role in business and every day life. I raise this topic today as the World Cup in Qatar advertises itself as a Carbon Neutral event. They purchased 1.8 million carbon offsets from the Global Carbon Council which is a Doha based company specialising in renewable energy. The World Cup is estimated to have generated around 3.6 metric tons of Carbon emissions. Still they have taken steps in the right direction, but definitely not carbon neutral and far from it.

Firstly what is a Carbon Credit?

A carbon credit is purchased from the Government which will entitle you or a company to produce or generate one ton of CO2 emissions. The purchases flow directly from the company to the government, but if you have excess credits you can sell them to other companies. A good comparison is a fisherman can sell his catch quota if he isn't going to use it all and claw back the cost.

Companies are allocated a certain number of carbon credits annually which may or may not be enough as the Government controlled credit system is designed to reduce the amount of credits issued each year. The Paris agreement was set to reduce Carbon emissions worldwide and countries have to comply by forcing companies to monitor their emissions.

What is a Carbon Offset

This is basically purchased from a company that is removing carbon from the atmosphere through their normal business day. Offsets are available in the open market and are purchased by companies requiring offset carbon credits to reduce their carbon footprint.

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As you can see by the above graph that this is going to become big business in the coming years. Generating $400 million last year growing to around $25 billion by 2030 which all depends on the carbon credit price per country. Prices vary, but the prices are expected to come into line as this gathers more momentum.

Tesla sold off Carbon Credits to other car manufacturers in the first quarter of 2021 for a reported $520 million. The price of credits will rise and this could turn out to be a big money maker for Tesla long term.

I have raised this Carbon Emission topic before when discussing the VET token with their VE Carbon partnership with AWS. Just this should highlight how big VET will be in the future as they are seen as the gold standard for monitoring carbon emissions. VET may seem like not doing much right now, but the VE Chain has placed themselves in the right areas to benefit once this takes off. Many investors have no clue what technology VET along with the daily use cases that it is offering. Scary where VET could end up at as the crypto project is leading the way in this field.

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9 comments
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So companies can literally declare themselves Carbon Neutral or emission friendly if they have a ton of money to give the government, even when their actions tell a different story.

I have nothing against them but it just means that small companies/nations won't be able to compete

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The amount of carbon credits is limited and having to buy carbon credits increases the costs very fast. If rich companies aren't reducing emissions and they're just buying carbon credits, they will not be rich companies for very long.

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Yes sounds about right and why this has to be thought out carefully otherwise this will be gamed by the big companies.

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What should the Hive community be doing about this, our witnesses generate carbon (unless they are hosted in a 100% renewable datacentre) so should we start factoring this into the witness rewards? Or perhaps should we propose to spend an amount of the DHF to buy carbon credits for the network as a whole? as you say overbuying could work out quite lucrative. Thanks for a thought-provoking post!

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This is a good opportunity if you can afford to buy a few credits as this price is going to sky rocket still. Being able to lease them out will be lucrative and is a good way to think being ahead of the game.

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The whole notion of carbon credits and carbon neutral is such a damn farce! There are so many other things that go into environmental pollution but they don’t care about that. This is all an additional tax on the poorest of people and a way to stifle business and innovation by the most insidious of the people in the world.

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Wow, that is interesting. I wouldn't have guessed that all of the countries are at least participating in this. I still think we need to see some more nuclear plants. I really think that is the way forward. There are so many safe options being developed now. It is exciting to see the advancement.

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