Need for carbon credits
Over millions of years, our planet has managed to regulate concentrations of greenhouse gases through sources (emitters) and sinks (reservoirs). Carbon (in the form of CO2 and methane) is emitted by volcanoes, by rotting vegetation, by burning of fossil fuels and other organic matter. But CO2 is absorbed, by trees, forests or by some natural phenomenon like photosynthesis and also oceans to some extent.
In modern times the burning of fossil fuels like coal, oil and natural gas – in which carbon has been stored for millions of years – combined with accelerated land clearance has led to exceptional levels of greenhouse gas emissions. Vegetation, largely forest, is already absorbing about one-third of human-induced emissions, planting more forests could increase absorption. Carbon sinks can’t keep up, and concentrations of greenhouse gases in the atmosphere have risen dramatically leading to an enhanced greenhouse effect which will result in very rapid warming of the world’s climate.
If the Earth heats to the unsafe level it is expected to then our national security is at stake. It is now accepted worldwide that the globe is warming to such an extent that the livelihoods of large swathes of the world’s population are under serious threat. The results are likely to include intensified droughts and floods, changed weather patterns, agricultural breakdown, ecosystem disruption, rising sea levels, epidemics, and social breakdowns that ultimately threaten the lives or livelihoods of hundreds of millions of people.
As global economies grow, use more natural resources, and emit more Carbon Dioxide (CO2), more solutions will be needed to reduce global warming. People have become increasingly concerned about the possible effects of global warming. Global warming is a serious threat to humanity as a whole.
Since CO2 is the main contributor to the effects of Global Warming the Greenhouse Gases are known collectively as CO2 emissions. At some point the build-up of carbon dioxide and other greenhouse gases in the atmosphere will change the climate disastrously.
The financial markets provide one unique way of limiting CO2 emissions through the creation of a carbon credit market. The concept is that this would give companies, countries, and individuals a financial incentive to produce less CO2.
Its goal is to stop the increase of carbon dioxide emissions. It encourages compliance and financial managers to pursue cost effective emission reduction strategies and provide incentives to emitters to develop the means by which emissions can inexpensively be reduced.