Three Benefits of Carbon Trading You Need to Know
It’s not new information. The effects of greenhouse gases (GHGs) have an impact which in recent years has become noticeable in daily life. The World Meteorological Association’s year-end report confirms as a planet we are warmer and the substantial increase in greenhouse gas concentrations is a leading contributor. How substantial?
Based on pre-industrial 1750 levels we have seen an increase in carbon dioxide by 147%, methane by 259% and nitrous oxide by 123%.
The effect on biodiversity, ocean ecology and the human impact through floods and drought may all be harmful results of the greenhouse effect.
Managing our Greenhouse Gas contributions is completely in our control. Carbon markets offer one solution to aid in helping us work together to solve an issue which took humankind more than 100 years to produce. Solutions are what we need. Thinking globally, working collectively can make an important difference and that’s where carbon markets shine.
Why Businesses Carbon Offset
There are very few countries in the world where offsetting is mandatory for the private sector. Most businesses that offset participate in voluntary offsetting. Businesses choose to offset for many reasons:
- To manage their carbon impact in a cost-effective way,
- to set an internal carbon price for their business,
- to fulfill supplier sustainability requirements requested by customers,
- to better manage climate risks and reduce emissions,
- or to get ahead in their industry and differentiate themselves as sustainable brands.
Let’s take Canada as an example:
1) Regulations & policies provide defined goals.
Example: Canada’s commitment to climate change
The Pan-Canadian Framework on Clean Growth and Climate Change outlines Canada’s commitment to meeting its climate targets under the Paris Agreement. Canada has committed to reducing its GHG emissions to 30% below 2005 levels by 2030. However, Canada is still severely behind in meeting this target. Canada is one of the few countries which intends to include international offset credits in its strategy to meet its emissions reductions goals.
The most direct impact Canadian businesses will feel from the Pan-Canadian Framework is from nation-wide carbon taxes. All provinces and territories in Canada now have a Provincial or Federal Tax. Environment and Climate Change Canada has concluded that emission reductions from carbon pricing will be 80-90 million tonnes by 2022.
2)Creating a marketplace for cooperative efforts.
Voluntary and compliance-based carbon markets
The international carbon market is subdivided into markets that are both compliance-based and voluntary. The compliance-based market stems from international agreements such as the Paris Agreement, where countries’ emissions reduction targets are known as Nationally Determined Contributions (NDCs). Government agencies and businesses can also be required to make emission reductions, often requiring them to purchase carbon offsets.
The human factor influence purchasing
When a company makes the decision to participate in carbon markets as part of policy it also makes a decision to be mindful of the emission producing areas of business to take action to operate efficiently. It doesn’t only feel good as a leader to be lean on carbon production but it can also be profitable. When potential customers are educated on sustainability commitments or the actions taken to reduce greenhouse gas emissions, it can trigger sales.
A study from Global Web Index suggests that regardless of age demographic, green purchasing is on the rise, and millennials (age 21-35) are taking the lead with 61% saying they would pay extra for eco-friendly or sustainable products.
At Intengine, we love to connect companies to solutions.
When you are ready to enter the carbon market, Download our whitepaper which outlines the key considerations you need to begin.