The Paris Climate Agreement, signed in 2015 by 196 countries, aims to limit the global temperature rise to below 2 degrees Celsius above pre-industrial levels. One of the key measures to achieve this goal is the use of carbon credits.
A carbon credit is a permit that allows a company or country to emit a certain amount of greenhouse gases. Each carbon credit represents one tonne of CO2 equivalent emissions reduced or avoided. The idea is that companies that emit less than their allotted amount of CO2 equivalent emissions can sell their unused carbon credits to companies that emit more than their allotted amount.
Under the Paris Agreement, countries can use carbon credits to meet part of their emissions reduction targets. This is known as the “internationally transferred mitigation outcome” (ITMO) mechanism. Countries can transfer carbon credits they have earned to meet their emissions reduction targets to other countries. This will allow developing countries with lower emissions to sell their carbon credits to developed countries with higher emissions.
However, the use of carbon credits has been controversial. Critics argue that carbon credits allow companies to continue emitting greenhouse gases without addressing the root causes of climate change. They argue that carbon credits create a “credit bubble” that undermines efforts to reduce emissions.
The Paris Agreement aims to address these concerns by establishing rules for the use of carbon credits. The rules require that carbon credits must be real, measurable, verifiable, and additional. This means that carbon credits must represent real emissions reductions or removals that would not have occurred without the Paris Agreement.
The Paris Agreement also establishes a mechanism to ensure that carbon credits are not double-counted. This means that countries cannot count the same carbon credits towards their own emissions reduction targets and transfer them to other countries.
In conclusion, carbon credits are an important tool in the fight against climate change. They allow countries to meet their emissions reduction targets while providing economic incentives for emissions reductions. However, it is important to ensure that carbon credits are used in a way that does not undermine efforts to reduce emissions. The rules established under the Paris Agreement aim to ensure that carbon credits are used in a transparent and accountable manner.