Carbon Credits

With global warming due to greenhouse emissions becoming probably the most serious threat for the planet and human-kind today, a series of steps have been taken globally to cut down on emissions. The rationale behind Carbon Credits is to put a cost to greenhouse emissions in terms of real money, and create an incentive for industries and corporations for keeping their emissions low.

The Carbon Credits system, put into place through the Kyoto protocol in the Earth Summit in 1992, defines upper limits on the amount of greenhouse emissions allowed for developing and developed nations. The nations then take their limits, and accordingly define limits for local industries and corporations, called 'operators'. Effectively, each operator is allowed a certain volume of emissions, measured in credits. If any operator can manage to keep their emissions under the limit, they can 'trade' the difference. Similarly, any operator which emits more than its credits, must buy those credits by paying money.

With the above system in place, any operator, say A, whose emissions exceed their
allocated credits by a certain amount might do either of the following:
- Pay an operator B who has some surplus credits to buy credits equal to the amount, or
- Pay money to an operator C which C can use to invest in technology to reduce its emissions by that amount.

The above mechanisms which allow credits to be traded allow operators to find out the most cost effective way of cutting its greenhouse emissions, by choosing to invest in technology that can reduce its emissions, or by buying credits from another operator who has excess credits.

The above mechanism also extends to countries. Developed countries with a very high cost of reducing greenhouse emissions can sponsor a low emission project in a developing country. The developed country effectively gets credits to meet its emission reduction targets, while the developing country can get capital investment or clean technology. This system very effectively puts a price on emissions, and in turn, the emissions show up on their balance sheets as liabilities, in case of operators that exceed their credits, and assets, in case of operators who keep their emissions less than their credits. With emissions directly affecting the profitability of a company and the economy of a country, the managements and governments are driven to invest in technology that cuts emissions and if possible, accumulate extra credits.

Hybrid Cars

Any vehicle that can combine two or more methods which can create power to propel it is called a hybrid vehicle. Hybrid cars, which can use both a fossil fuel like diesel or petrol and electricity to power them have recently seen a rise in usage and production due to the increase in fuel prices and the rising awareness about the harmful effects of greenhouse emissions.

Hybrid cars combine small fossil fuel and electric engines which are operated both independently and in tandem to create power to move the vehicle. Electric engines turn off when the car is idling at a red light, thereby saving energy. Electric engines are also very good for use at lower speeds, and in general, inside a city. Fossil fuel engines become useful when the car is being driven at higher speeds. By using both the engines according to the driving conditions, hybrid cars minimise fossil fuel consumption and greenhouse emissions. It has been proven that hybrid cars emit lesser than 50% of greenhouse and other harmful gases compared to traditional cars that use only fossil fuel engines.

While hybrid cars remain expensive compared to traditional cars as they use recently developed technology which is still not used very extensively, they have been able to develop a lot of interest because of their environment friendly, smart and responsible label. Across the United States, many states have recognized the need to incentivize the use of hybrid cars, and have offered free parking to hybrid vehicles. United states has also provided tax incentives on buyers of the first 60,000 hybrid cards yearly by each manufacturer. Many businesses, too, have started giving incentives to people who own or plan to buy hybrid vehicles. For example, Google offers each employee an incentive of $5000 towards buying a hybrid.

It has been argued that buying a smaller car or using a car pool are better ways of cutting emissions or saving fuel. For those who are not quite ready to make the 'compromise', and still wanting to be good to the planet, hybrid cars probably are a good bet.