Pakistan’s contribution to global climate change is less than 1 percentage; however, Pakistan is among the top listed countries that are most vulnerable to climate change. The government of Pakistan is putting efforts to tackle climate change without any international assistance. The example includes billion tree tsunami projects.
A carbon credit is a kind of permit or tradable certificate/license that allows one tonne of carbon dioxide emissions. Interchangeably, it could be any component of greenhouse gases that should be released in certain amount permits by carbon credit. Check out Top Companies Contributing to World’s Third Carbon Emission
PURPOSE OF CARBON CREDIT
Initially, the purpose of carbon credit is to limit emissions of greenhouses in the atmosphere in order to reduce the contribution of greenhouse gases that are responsible for global warming.
TYPES OF CARBON CREDIT
There are two types of carbon credits.
Types of Carbon Credit
|Voluntary Emissions Reduction||
Certified Emissions Reduction
|This is a voluntary action/step taken by the company in order to play an active role in mitigating climate change. It is not regulated by any law.||This is governed under the regulations of the Kyoto Protocol and the third party issues carbon credit for a company to reduce greenhouse gases emissions.|
CARBON CREDIT TRADING
Carbon credit trading is a process of selling and buying carbon credits by a company to either limit greenhouse gases emission or release greenhouse gases in a certain amount.
HOW DOES CARBON CREDIT TRADING WORKS?
Carbon credit trading is working on the mechanism of market-based approach named as cap and trade or EMISSIONS TRADING. There are companies responsible for polluting the environment through the release of greenhouse gases especially carbon dioxide. A regulatory body issues carbon credits to the companies or nations that allow them to emit greenhouse gases in the environment up to a certain limit. One carbon credit approximately accounts for one tonne of CO2/equivalent to any greenhouse gas. The carbon credits decrease over time. Sometimes companies sell these credits in carbon markets to balance out the global emission of greenhouse gases.
The carbon market is a kind of market where carbon credits are either sold or obtained with the sole purpose of reducing the company’s contribution to greenhouse gases emissions. There is no fixed price for carbon credit because of the difference in supply and demand by any country.
TYPES OF CARBON MARKET
There are two types of Carbon Market.
Types of Carbon Market
|The carbon credits are sold on a voluntary basis to the carbon emitters.||This market is used by governments and companies that are accountable for greenhouse gases emissions.|
PAKISTAN BENEFITING FROM CARBON CREDIT TRADING
Pakistan is a developing country and it is blessed with natural resources. The country is concentrating on creating a domestic emission trading scheme in order to generate carbon credits according to international standards. This market-based mechanism would allow Pakistan to sell carbon credits to other countries.
Now the question is HOW IS PAKISTAN BENEFITING FROM CARBON CREDIT TRADING?
The Government of Pakistan has launched several clean green environment projects i.e billion tree tsunami projects, protected areas initiatives, etc. A considerable amount of budget has been allocated for such initiatives. The massive plantation of trees across the country would help reduce carbon emissions as well as these reforestation projects will assist in earning currency through selling carbon credits in the international carbon markets. Reforestation in Pakistan through the billion tsunami project could be considered a source of carbon credit generation under the Clean Development Mechanism. Pakistan is likely to earn Certified Emissions Reduction carbon credits through reforestation projects.
Pakistan’s collaboration with China’s carbon emission trading scheme from 2021 to 2025 will bring many positive opportunities for the country.
Carbon credits are launched with an aim to reduce contribution to greenhouse gases emissions by any company or especially for new investors. Pakistan has the potential to play a significant role in the largest carbon emission trading scheme launched by China. Through this scheme, revenue could be generated by selling carbon credits to China. Pakistan’s participation in the carbon emission trading scheme will likely have positive impacts on the economy that in return would create job opportunities for people.
Also, check out What Is Decarbonization And How To Do It Successfully?
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– MS Environmental Science
– Content Writer
Researcher, Nature Lover, and Environmentalist