Carbon Credit: Why do they matter to your company?

Submitted by Carina Lima on Tue, 07/18/2017 - 17:53
credito de carbono

The reduction of greenhouse gases has become an increasingly relevant and important issue for mitigating climate change. Nations have sought ways to encourage companies to both decrease pollution and to raise awareness of the importance of this issue.

Carbon credits are an initiative of governments worldwide to generate source of savings for countries that reduce greenhouse gas emissions or remove them from the atmosphere. But do you know how these savings can benefit your company?

 

What is a carbon credit?

 

With the signing of the Kyoto Protocol in 1997, a market was created for the reduction of greenhouse gases, assigning a monetary value to the reduction of emissions. One of the Flexible Mechanisms defined by the Kyoto Protocol is the Clean Development Mechanism (CDM).

The signatory countries of the Protocol have agreed to reduction targets. Carbon credits received in the process of meeting these targets can be sold to governments or companies that have not been able to reduce their emissions.

Despite the difficulty some countries have had in reducing emissions, experts agree that the most important thing from an ecosystem perspective is the global effort to reduce greenhouse gases, regardless of political boundaries and progress toward compliance in specific jurisdictions.

Thus the carbon market allows a government or business to acquire emissions reductions created elsewhere to achieve its own objectives.

The goals of the initial agreement were expanded and updated at the Durban Climate Change Conference in 2011.

 

Opportunity for businesses

 

The carbon market has gained prominence as an economic opportunity for companies that demonstrate reductions and sell their credits on the carbon market. In this way companies can recover part of the investment made in sustainable projects.

In addition to the financial advantages, it is also possible to bring gains to society focusing on the well-being of the planet, and your company's brand benefits from these efforts. Some companies donate their carbon credits to contribute to the planet in global events such as the World Cup or the Olympics. The increase in the use of transportation, construction, and even lighting in the venues has the potential to greatly increase greenhouse gases, and these factors motivated companies to participate in the Sustainable Cup campaign in 2014. The companies that joined the campaign donated their carbon credits to offset part of the emissions generated by the World Cup. In addition to their contribution for the environment, these companies could advertise their brands liked to a global sustainability initiative.

In order to promote the market, some governments have established that companies that are significant emitters of greenhouse gases must buy carbon credits from companies that have them so that there is always a supply and demand relationship for carbon credits. This market is considered to be a commodities exchange, that is, a carbon credit is a commodity having a price established by the international market. The established parameter is that each ton of carbon dioxide either not emitted or removed from the atmosphere is equal to one carbon credit.

Carbon credit

Flávio Gazani, the president of ABEMC (Brazilian Association of Carbon Market Companies) explains that in order for a company to obtain carbon credits they are required to submit an emissions reduction project to a national or international commission. The commissions assess whether the project presented is in fact an initiative that will benefit the atmosphere, and they approve the carbon credits accounting, taking into consideration the greenhouse gases that the company no longer emits. Initiatives such as the substitution of polluting sources of energy by clean energy, adoption of programs of energy efficiency, and also software that reduces the consumption of energy generate credits because they are initiatives that reduce emissions by not using energy sources that are more polluting or by reducing the consumption of energy.

Final considerations

 

Preventing the advance of global warming is a responsibility shared by all, from governments to companies.   The Kyoto Protocol took the form of an incentive for institutions to have some economic return when they proposed to adopt measures that benefit the environment. Even in cases where the financial gains do not represent a windfall for a company, the return for the atmosphere and all of society in general is of extreme importance and is worth institutional dedication.

Marketing Coordinator, Viridis Energy

Marketing Coordinator at Viridis, holds undergraduate degree in Event Management and a graduate degree in Marketing and Communications, certified in Inbound Marketing by Hubspot, with great experience in digital marketing, corporate event production, content marketing, copywriting, planning, and SaaS sales.

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