Merits And Demerits Of Carbon Trading

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As a result of rising concern over global warming because of increased carbon emissions in the air, governments and other agencies have been trying to find effective solutions to the issue of pollution. Carbon offset and carbon trading are among the most effective methods being practiced for achieving this.

In carbon trading, carbon credits are purchased and sold in the market by businesses. The credits limit the level of greenhouse gases that companies can release in to the atmosphere without being penalized for it.

Carbon trading motivates companies to control their emission levels by giving financial rewards for doing so. The purpose is to make organizations realize that the cost of carbon credits is a lot higher than the expenditure on adopting environment friendly methods of doing business. If the firm is forced to bear the costs of damage to the environment then it will use techniques that are environment friendly to score over its competitors. With the number of businesses that follow this system rising, the amount of overall emissions by nations will decrease, thus making the environment cleaner.

Another significant benefit of carbon trading is that it is based on an open market system where any firm can buy or sell carbon credits. As a result of non interference from the local administrations such as imposition of fines or making regional laws, this method is more successful.

The biggest drawback of carbon trading is absence of a comprehensive global framework for trading. As most of the trading happens in the global markets, it is difficult for some local companies to follow this system.

There is some resistance from a few companies towards this approach as the expenses incurred during carbon trading cannot be passed on to the customers. Moreover, many small businesses are unable to bear the expenses required for buying new machinery and developing new processes to lower their emissions. Hence, they are caught in a situation where they have to go on paying for carbon credits year after year, which implies that they will lose out to bigger companies eventually.

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

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MLA Style Citation:
Oswald, Farrah "Merits And Demerits Of Carbon Trading." Merits And Demerits Of Carbon Trading. 29 Dec. 2009. uberarticles.com. 9 Feb 2012 <http://uberarticles.com/environment/merits-and-demerits-of-carbon-trading/>.

APA Style Citation:
Oswald, F (2009, December 29). Merits And Demerits Of Carbon Trading. Retrieved February 9, 2012, from http://uberarticles.com/environment/merits-and-demerits-of-carbon-trading/

Chicago Style Citation:
Oswald, Farrah "Merits And Demerits Of Carbon Trading" uberarticles.com. http://uberarticles.com/environment/merits-and-demerits-of-carbon-trading/

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