<aside> 💡 "Energy is indeed the major contributor to climate change and to local air pollution", Global Energy Fundamentals by Simone Tagliapietra (2019).
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For keeping our modern way of life uninterrupted, lots of hydrocarbons are required.
A fancy trip from the US to Thailand, accounts for lots Co2 Kg per person. Getting clothes and electronics delivered from factories in Asia to your doorstep in Europe, requires to burn fuel. Hosting work files and selfies in the cloud requires electricity.
Everyday the world consumes gigantic amounts of energy, roughly 84% of it comes from fossil fuels, oil, natural gas and coal. This percentage is remains almost uniform, independently of the group of countries considered (OECD 80%, Non-OECD 87%).
In fact, even after the effect Al Gore’s movie ‘An Unconvenient Truth’ caused, fossil fuels use grew by 20%, from 113,613 to 136,762 TWh (Data from Ourworldindata.com) Emissions soared 17.5% in the same period (BP 2019 Statistical Review).
Temperatures are rising. Mainstream scientists agree on the origin of that phenomenon. Carbon dioxide is to blame, even though the primary greenhouse gas is water vapor, the well-known H2O.
Ideally, fossil fuels should be replaced by cleaner options but, that is something that it is impossible to this day. It even might be the case that replacing one with other on a 1:1 basis could be achievable, not because the sun, sea or wind are not abundant enough, but because the potential energy contained in fossil originated liquids is greater that the one obtained from renewable sources.
But that’s physics. Finance has a different interpretation.
As Maslow said “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”, if emissions are the consequence of keeping economies growing, it could be applied the other way around, by creating financial incentives that help of fighting global warming.
After all, morale alone was incapable of stopping them (and us).
Let’s start with the official definition:
A carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas. The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming.
Based on the text, a Carbon Credit is an tradeable instrument that gives the buyer the right to pollute.
It is like admitting you're not capable of changing yourself and procure it from others. A man can't stop drinking; therefore, he buys some soberness from one of his acquaintances.
This Carbon Credits are presented in the form of projects, companies can put their money in diverse initiatives mostly in developing countries, allowing local population to improve their quality of life.