Green House Gases (GHGs) are Carbon dioxide, Methane, Nitrous oxide, Sulphur, Hexa fluoride HFCs (Hydro Flouro Carbon) and PFCs. Increasing concentration of these gases in the atmosphere has become a cause of global warming and its associated fallout on earth. Disastrous effects due to global warming has begin to show and will increase if it goes unchecked. Obviously there is a need of reducing GHGs emissions. In order to make headway into this, the concept of Carbon Credit has been brought into existence.
The concept of Carbon Credit came into existence as a result of increasing awareness of the need of controlling emission. As we are aware the emission of Green House Gases (GHGs) has been rising alarmingly.
The Kyoto Protocol which is an international agreement among 170 countries has created a mechanism under which countries that have been emitting more GHGs gases have been asked to reduce these and bring these down the level of emission of early 1990’s.
A company has three ways to reduce emissions:-
(i) It can reduce GHG by adopting new technology
(ii) It can improve upon the existing technology
(iii) It can tie up with companies of other countries and help them setup new technologies
that are eco friendly and thereby helping developing countries or its companies by
means of Carbon Credits.
India being a developing country has an advantage. Any company, factory or establishment in India can get linked to United Nation Framework Convention on climate change (UNFCCC) and know the standard level of carbon emission allowed for its activity as per standard fixed by UNFCCC. The difference of carbon emission with the standard is the carbon credit accruable to the company. This is called Carbon Credit or Certified Emission Reduction credits (CERs).