As you know, air pollution is a global environmental problem. Developed countries are the ones that emit the most greenhouse gases per year. The amount of these gases causes a greater retention of heat in the atmosphere and, as a result, an increase in average global temperatures. Because the largest greenhouse gas emitted into the atmosphere is carbon dioxide, there is an “economic” instrument known as carbon credits.
What are carbon credits and markets
Carbon credits and carbon markets are a component of national and international efforts to mitigate growth in greenhouse gas (GHG) concentrations. One carbon credit equals one ton of carbon dioxide, or in some markets, carbon dioxide is the equivalent of gases, which is no longer emitted into the atmosphere due to the reduction of emissions of these gases during production or due to the introduction of new technologies. Carbon Trading is Applying an Emissions Trading Approach. Greenhouse gas emissions are capped and then markets are used to allocate emissions among a group of regulated sources.
This is the type of economic instrument that was considered in the approval of the Kyoto Protocol and which helps to control carbon dioxide emissions in the countries of the said protocol. We can say that this is the country’s right to emit this greenhouse gas.
The expansion of the global carbon credit market is not limited to mandatory emission credits: more and more large companies are voluntarily investing in projects aimed at reducing CO2 emissions to zero emissions at the corporate level.
Along with the “green bond market”, voluntary carbon markets can be one of the largest sources of funding for projects aimed at reducing greenhouse gas emissions. According to Taskforce on Scaling Voluntary Carbon Markets, the demand for carbon credits will grow 15 times by 2030, and by 2050 – more than 100 times. The market size in ten years may reach $ 50 billion. In 2020, loans purchased on voluntary markets made it possible to “offset” emissions in the amount of 95 million tons, which is twice as much as in 2017 (by 2030 it could reach 1.5 –2 thousand Gt CO2-equivalent).
Basically, these carbon credits provide a simpler basis for calculating the amount of gases emitted into the air and how to offset their emissions. These carbon credits have been included in international plans to improve efforts to reduce global warming and all the negative impacts it has on both natural ecosystems and people.
Battle for the climate
Voluntary carbon markets are becoming commonplace amid efforts by companies to offset emissions. These markets are already fully developed in a number of countries, but only a few regions, such as the European Union, Alberta in Canada, and California in the United States, currently have mandatory emission markets. In other regions, most of the measures taken by companies to offset emissions are voluntary.
Voluntary carbon markets provide companies with a tool to offset some of their carbon emissions by purchasing carbon credits. These loans are given to businesses that clean up or reduce greenhouse gas emissions. Buyers can access the voluntary carbon market by purchasing loans directly from project sponsors through structured local schemes.
Companies buy cities’ carbon credits to finance sustainability projects and to grow their CO2 capture capacity over time.
Climate action plans
Latitudo 40 offers a solution, a Urban Data Analytics Platform, based on satellite imagery, artificial intelligence and geospatial analysis, to make simple and effective climate action plans and deliver better quality of life.
We also created a marketplace to seek funding from national and multinational companies for environmental sustainability projects.
How it works?
- We identify projects to improve sequestration capacity, to be funded by companies in exchange for carbon credits, to be used for ESG campaigns.
- Based on the evolution of the city, we can estimate whether the CO2 sequestration capacity will increase or decrease in the coming years.
- Our artificial intelligence algorithms are used to analyse images and identify features (that are used to estimate carbon)
- We search for the most recent satellite image of a city, with our automatic acquisition system.
Carbon markets are developing beyond government regulation. The role of voluntary emission reduction offset schemes based on the implementation of investment projects is growing. Companies are encouraged to become participants in such schemes both by the desire to reduce greenhouse gas emissions for reasons of corporate responsibility, and by the presence of associated benefits, including obtaining long-term competitive advantages due to the earlier adoption of advanced green technologies compared to competitors.
Learn more about approach.