Carbon Credits - Do They Undermine the Effort to Tackle Climate Change?

There have been innumerous perspectives on carbon credits since its inception in 2005 through Kyoto Protocol. However, most arguments are not in accordance to the objective and the factors that influence the process.

As a Demand -

The fact that European companies need to have their carbon credits to a mandatory levels by 2012 creates an artificial demand and secondary demand due to fact prices would go up by then pushes the demand for companies to look out for more carbon credits. This is demand is indirectly the environmental obligation few years back realized today as a commodity demand. This reveres the equation on social responsibility.

Benchmarking -

Even if there is no realized returns out of the market or there is no reduction in pollution still the move should be encouraged as it brings a scalability and benchmarking on the level of pollution a company makes and the keenness of the company to maintain its environmental record. This monetary value of emissions makes it easier for the peers and critics to compare a firm`s environmental performance.

Evangelization -

The fact that money can be made in credits and the point that US is yet to sign the contract reveals the mammoth potential the process has in the future. Another gain out of the move is the channelization of funds from a developed country to developing country in gaining more credits. This fact that developing countries are ensured of non-pollution makes carbon credits adorable outweighing its disadvantages.

The counter argument to argument that the credits are a compromise a company makes elsewhere for the crime done on home is overrated. The mandatory rule is that only 25% necessary credits demanded can be bought from outside.

Thus the possibility of carbon credits undermining the effort to tackle climate change is very minimal.