Investors can earn saleable emission reduction credits by investing in projects having Clean Development Mechanism permits or projects registered under the Kyoto Protocol. The emission reduction credits generated under Kyoto Protocol can be bought by the countries committed to stimulate emission reduction and development. It is an ethical investment opportunity and institutional investors have realized huge profits in carbon credit investment strategies. Hence, it is believed to be a gainful opportunity which can provide long time stable profits.
Concerns over global warming
Environmentalists have been raising concerns over global warming from decades and the ill effects of global warming is now visible in the form of poor food grain production, climate change and increasing natural disasters. Carbon credits provide a method to regulate harmful emissions across the globe which is monitored by offset groups that have the authority to authenticate emissions and give credits.
Cap-and-trade mechanism
Countries are adopting new ways to reduce emissions and carbon credits are given for absorbing a fixed amount of emission from the atmosphere. Cap-and-trade tax was implemented by countries, which combined emission trading mechanism and the voluntary CO2 market price, to determine the rate of credits.
The cap-and-trade mechanism was first implemented by the European Unions Emission Trading System which attracted attention of many countries, although, it was also criticized because many could not understand how it will work. The initial three years of CO2 trading (from 2005 to 2007) is considered the trial period of cap-an-trade mechanism which helped to create a background for many other forms of CO2 trading schemes.
Today CO2 is traded in many forms and commitment has been made by many developed and developing countries to reduce emissions by 2050 in the range of 30 - 80%. Some large-scale industries provide Renewable Energy Certificates to trade emission credits and companies are investing in renewable energy resources to reduce emissions.
Carbon credit trading
Carbon credit trading refers to the scheme, in which, carbon will be purchased by industries that are emitting higher amounts of carbon dioxide into the atmosphere, and this will help to cut emissions. These industries will have to compensate for emissions to get neutral and different forms of environmental calculators are used to assess the amount of emissions.
Generating carbon credits
Carbon credits are tradable and many projects have been created to absorb carbon from the atmosphere to generate credits. These credits can be sold to industries to neutralize the carbon emissions, and forestation project and agriculture are two simple and low investment methods to generate credits. Forestry creates sink which can absorb more than 20 to 30% of emissions, and Capital Alternatives provides opportunity to invest in reforestation projects in Amazon rainforests and Africa to generate regular tradable credits. To know more about the opportunity, contact: info@capitalalternatives.co.uk
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