What is Carbon Credit Pricing Scheme ?
The Carbon Credit Pricing Scheme is a mechanism designed to encourage the reduction of greenhouse gas (GHG) emissions by placing a monetary value on carbon emissions. It incentivizes organizations and countries to adopt cleaner technologies and practices. Here’s a detailed overview of the scheme: 1. Understanding Carbon Credits A carbon credit represents the right to emit one metric ton of carbon dioxide (CO₂) or its equivalent in other GHGs. These credits can be earned by reducing emissions below a baseline level or through activities like afforestation or renewable energy projects. 2. Key Components of Carbon Credit Pricing a. Pricing Mechanisms Carbon Tax : Directly sets a price on carbon emissions. Emitters pay for each ton of CO₂ released into the atmosphere. Example: Canada's carbon tax program. Emissions Trading System (ETS) : A cap-and-trade system where a limit (cap) is set on emissions. Companies that emit less than their cap can sell surplus credits to others. Example:...