I want it to be explained as simple as possible, because I have a wide audience and have to give a pitch, and don’t know how to simplify this thing. Especially the voluntary carbon markets and carbon offsets. I want a genius analogy.
I’d really appreciate your help 🙂
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It’s just replacing what you use. A business would be hard pressed to use no non renewable energy but you can make up the carbon that you use by planting trees.
A carbon credit is a currency, like dollars or euros or whatever, that is created when someone does something that reduces carbon emissions.
A simple analogy is receiving an allowance from your parents when you do your chores. Every time you wash the dishes (reduce carbon emissions), your folks give you allowance (carbon credits) that you can spend on candy or toys. When you exchange your allowance (credits) for treats (cash), this is the equivalent of selling credits for cash.
Every time a person, company, or organization does something verifiable that reduces carbon emissions, such as plant extra trees, captures methane emissions from cows or a landfill, or some other voluntary activity, they can create credits that can be sold or exchanged with another person, company, or organization that wants to offset or reduce carbon emissions.
Suppose you have two people. Like most people, they have to use the bathroom on a regular basis.
Now suppose that they each have to pay a subscription to use the toilet in their house. For $10 a month, you can go to the bathroom twice a day.
Now, suppose one of the people goes on a diet. That diet has the net effect that they only have to go to the bathroom once a day. However, the other person has a problem: their eating habits are very poor, and really they need to go to the bathroom three times a day.
The person needing more visits to the bathroom could pay a fee and go to the bathroom. Or, the person needing fewer visits could sell their unused bathroom visits. The net use of the toilet goes down, and the person on the diet gets a little reward.
I have a better and shorter answer. They’re a scam. Or at least most of them are. There’s not agreed upon regulation or oversight and often times the asset that’s someone being paid not to destroy ends up destroyed anyway. This video explains it far better than I can…. https://www.youtube.com/watch?v=EIezuL_doYw
They’re like taxi plates for emitting CO2
You can only do it if you have one , you can sell it to another driver if he wants to be a taxi , and the government can emit / cancel new plates , changing their value overnight
Imagine a neighborhood where the garbage truck comes to collect the trash every Saturday.
Now imagine a new regulation limits each household to one garbage can each Saturday. Most people in the neighborhood use one can or less anyway so it’s not a problem, but there’s one house in the neighborhood that generates a whole lot of trash each week.
The house generating lots of trash can offer to buy some space in their neighbors’ trash cans. Let’s say they offer to pay $5 for each cubic foot of their neighbor’s trash can. Everybody’s happy. The neighbors selling the space they aren’t using get a little extra money, the house generating a lot of trash is happy because they have found a way around the new regulation.
The important part is everybody in the neighborhood now has a financial incentive to generate less trash. The ones who don’t generate much want to generate even less so they have more space to sell. The one generating a lot wants to cut back because they’re paying $5 per cubic foot – money they could save if they stuck to just one trash can per week.
There are arguments against carbon credits. Most of them in bad faith but some of them are legitimate. Still, I think the idea is good overall. It solves more problems than it creates, it rewards the cleanest companies with higher profits and punishes the dirtiest companies with lower profits, and it incentivizes everyone to pollute less without resorting to draconian laws that will cause polluting companies to move across the border and continue polluting where regulations won’t stop them.
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