Carbon Markets
Carbon markets are systems where companies can buy and sell "carbon credits," which represent the right to emit a certain amount of carbon dioxide. To reduce greenhouse gas emissions, governments cap total emissions and allocate credits to companies. If a company emits less than its allowance, it can sell its excess credits. This creates a financial incentive to reduce pollution, as companies can profit from lower emissions. Conversely, businesses that exceed their limits must purchase additional credits. Overall, carbon markets aim to encourage environmentally friendly practices and combat climate change through economic mechanisms.
Additional Insights
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Carbon markets are systems that allow companies and countries to buy and sell permits for emitting carbon dioxide, a greenhouse gas that contributes to climate change. Each permit represents the right to emit a certain amount of carbon. If a company reduces its emissions below its allowed limit, it can sell its extra permits to others that need more. This creates a financial incentive for businesses to lower their carbon output and invest in cleaner technologies, ultimately aiming to reduce overall greenhouse gas emissions in a cost-effective way.
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Carbon markets are systems that allow businesses to buy and sell permits or credits for greenhouse gas emissions. Each permit allows a company to emit a certain amount of carbon dioxide. If a company reduces its emissions, it can sell its extra permits to others that need them. This trading creates a financial incentive for companies to lower their carbon footprints, promoting environmentally friendly practices. By capping total emissions and allowing trading, carbon markets aim to reduce overall greenhouse gas emissions in a cost-effective way, contributing to efforts against climate change.