Tuesday, February 26, 2013

Carbon credits .. some basics ..

The modern day supply chain has many interesting things to look around for. The most important and most immediately applicable ones are things related to Carbon emission into the atmosphere. We know Carbon emissions (greenhouse gases) lead to a warming of the earth leading to climate change. The least we want to .. A lean supply chain would also look at releasing lesser carbon-dioxide into the atmosphere thereby reducing the impact of global warming and climate change.

We come across some interesting terms in this regard. I thought of putting them for the easy understanding of my friends. They are

Carbon  footprint, Carbon credits, Carbon offsets, Carbon trading, Carbon sinks, Carbon capture, Carbon retirement etc..

Carbon foot print is the amount of CO2 that is released into the atmosphere.

Carbon credits is the final tradable commodity that can purchase off the shelf and continue damaging the environment without worrying about its implications. A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent (tCO2e) equivalent to one tonne of carbon dioxide. (wikipedia)


Carbon offset is the carbon savings we make at one place to be consumed by releasing CO2 at some other place. There is no buying and selling involved , only accounting of the CO2 saved at one place and the CO2 produced at another place. MRF tyres in India have energy farms which generate electricity in South Tamil Nadu which is fed to the power grid, which the company can use in Chennai or Arakkonam or Tirunelveli etc when they need. The Carbon credits gained at the wind farms are offset by the Carbon released at the tyre plants. The beauty is one is free to utilise the main resource, in this case electricity generated and consumed at different places, as also the benefits of Carbon savings accrued from using zero pollution technology of wind power at the source in another place of consumption where such zero pollution technologies cannot be used.

Carbon trading is the process whereby one saves CO2 emissions and create Carbon  credits which is soldl in the market to other players who have no option but to buy them as their pollution potential is more than pollution prevention potential for their organisational / business needs.

Carbon source : anything that generates more carbon than it absorbs

Carbon sinks : anything that absorbs more carbon than it releases

Carbon capture and storage (Carbon capture and sequestration) : is the process of capturing waste CO2 from large sources, transporting it to s site for storage where it will never enter the atmosphere, usually a geological underground formation.

Carbon Retirement : involves taking out Carbon credits from circulation so that there is no way that amount of CO2 will ever enter the atmosphere.


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