Carbon Credit
- Carbon credit is a generic term for any tradable certificate or permit
representing the right to emit One Tonne of Carbon dioxide or the mass
of another greenhouse gas with a carbon dioxide equivalent equivalent to
one tonne of carbon dioxide.
- The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Marrakesh Accords.
- Carbon credit facility has been introduced with an aim to allow market
mechanisms to drive industrial and commercial processes in the direction
of low emissions or less carbon intensive approaches,this approach can be used to finance carbon reduction schemes between trading partners and around the world.
- The carbon credits can also be traded on exchanges like Carbon Trade Exchange,
which is like a stock exchange for carbon credits. If it is traded
internationally then each transfer is validated by the UNFCCC.
- Currently there are 5 exchanges trading in carbon allowances:
- The European Climate Exchange
- NASDAQ OMX Commodities Europe
- PowerNext
- Commodity Exchange Bratislava
- The European Energy Exchange
