Fossil fuels have been extensively used as the primary source of energy for many decades now in all kinds of industries as well as for individual use. However, release of greenhouse gases like methane and CO2 is caused by fossil fuels, which is very hazardous for the environment. High accumulation of these greenhouse gases in the air is causing the phenomenon of global warming, with grave damage to the planet.

The carbon credit scheme was a direct result of the need to check emissions and safeguard the planet. Through the famous Kyoto protocol, an agreement reached by more than 170 countries, it was decided to put limits on emissions of greenhouse gases by every participating country. The set limits are then used by the nation’s government for allotting quotas to different industrial and commercial entities of how much emission they are permitted.

In the carbon credits system, the manufacturing units that emit greenhouse gases more than the allocated quota are punished while those producing less are rewarded. One carbon credit is equal to one ton of carbon dioxide released into the environment. In this innovative scheme, manufacturing units or companies that emit greenhouse gases within the prescribed quota can sell carbon credits of an amount equivalent to the difference, whereas those units that release above the limit will have to buy a corresponding amount of carbon credits from the market.

Global trading of carbon credits stresses on decreasing greenhouse emissions by its ‘reward and penalty’ strategy, and promotes a cleaner environment. The market of carbon credits has made emissions an intrinsic cost of doing business, which is now also included in the financial reports. Companies have thus woken up to the necessity of reducing their emissions and find environment friendly industrial options.

Carbon offset credit is another financial solution to reduce greenhouse gas emission, which works on a similar strategy. One carbon offset stands for the decrease of one metric ton of CO2 or an equivalent in other greenhouse gases. The decrease is usually achieved by using cleaner and more sustainable forms of energy such as solar and wind energy.

Like carbon credits, a carbon offset is bought to offset the emissions that are beyond the allocated limits for a company so that it is able to conform to the emission regulations. Companies, governments and even individual people can purchase carbon offset to offset their excess carbon footprint. This helps in promoting and funding decrease in emissions and furthering eco-friendly efforts of generation of energy.

Discover more about Carbon Credits and Carbon Offset and get a deeper understanding on how you can help in saving the environment.

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