What is a ‘Carbon Credit’? Why is it so interesting to invest in?

The main cause of global warming is known to be greenhouse gasses, which are mainly from wood burning, and deforestation fuel burning. There are a lot of various industrial plants such as Deforestation. However, did you know that large industries are also helping the world with what’s called ‘carbon credit’? What is this? and How is it so important? ACU PAY will explain to you.

What is the ‘Carbon Credit’?

A carbon credit is a right derived from the reduction of carbon dioxide or greenhouse gas emissions to the environment. This is because individuals and organizations have undertaken projects or measures aimed at reducing carbon dioxide or greenhouse gas emissions to the environment. This right can be measured and can be bought and sold in the carbon credit market.

It can be simply said that gasses cause greenhouse reactions (the amount of carbon) which each organization can reduce per year. If carbon is less than the threshold, it will be priced in money before being sold as a credit to other organizations.

Under the Kyoto Protocol, various mechanisms have been set for developed countries to reduce the amount of greenhouse gas emissions that cause global warming. One of the mechanisms is to trade pollution or carbon credits with developing countries because developed countries are unable to reduce greenhouse gas emissions as scheduled.

What is a Carbon Credit Market?

The carbon credit market is a central area for trading. The carbon credit is a marketing tool that encourages businesses and industries to reduce greenhouse gas emissions to the environment.

The carbon credit market can be divided into two main categories.

Mandatory Carbon Market

National or international industries, where the government determines the amount of greenhouse gas emissions. There are legal bindings and clear penalties if businesses fail to comply. The Mandatory Carbon Market will also involve trading carbon under the Kyoto Protocol.

Voluntary Carbon Market

It is a market for private companies or businesses that voluntarily reduce greenhouse gas emissions. Members can set their own ceiling on Carbon dioxide emissions, which will benefit SMEs who are interested in clean energy, which may be exchanged for carbon credits in the future.

At present, the carbon credit market in Thailand is a voluntary sector because there are still few entrepreneurs. The participants will be under the supervision of the Thailand Voluntary Emission Reduction or T-VER, which is an agency that certifies voluntary greenhouse gas reduction projects following Thailand’s standards.

Where do we get Carbon Credit from?

The carbon credit will come from projects that help save the environment, such as waste management, and tree planting by many companies. When the seedling grows into a perennial plant, it will measure the height, length, and perimeter of the tree and send information to the Thailand Voluntary Emission Reduction (T-VER) to calculate. If approved, they will be given credit called TVERS that can be used for carbon offsetting.

Why does all over the world, including Thailand, pay a lot of attention and become an investment that everyone keeps an eye on?

Short term benefits

Businesses and industries sectors around the world that have contributed to reducing global warming, to compensate for what their businesses or industries have released, will engage in activities such as promoting forestry and environmental projects.

Long term benefits

Both businesses and the public will work together to reduce greenhouse gas emissions. Businesses will invest in clean energy, and renewable energy for energy conservation, as well as in promoting the agricultural sector of the community and forest reforestation to create more carbon-absorbing areas.

For example, if business A cannot reduce its emissions, it will choose to trade in carbon credits from the residents’ gardens to compensate for the carbon credits of their businesses.

In addition, the general public can earn income from selling carbon credits. The following are the qualifications required.

Carbon Credit Vendor Properties

There is a tree planting area of 10 rai or more.
There are legitimate or legally authorized documents of rights.
Have knowledge of carbon storage assessment and project proposal documentation.
Has the ability to hire external assessors to verify their applicability and review greenhouse gas data.

So collaboration to help reduce the amount of greenhouse gasses is good for businesses or industries themselves and everyone on the planet.

References from