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 🙂
In: 4
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.
Latest Answers