Due to global warming a new source of income has emerged for the corporate which is called carbon credits. Carbon credit implies that a company earns credit for reducing the carbon dioxide emission into environment. One carbon credit is equal to one ton of carbon dioxide which implies that if a company has reduced the emission of carbon dioxide by 1 ton it receives 1 carbon credit which it can sell to other companies who have emitted more carbon dioxide than they are permitted to do.
A company can reduce the carbon dioxide by adopting new technologies for production which are more environmental friendly. Carbon credits are traded in market just like stocks by giving a monetary value to the cost of polluting air and therefore an incentive for those companies who are concerned about environment. Given below are some of the advantages of carbon credits –
1. The biggest advantage of carbon credit is that they help in reducing the global warming because this is being implemented across the world.
2. It helps the companies of developing world in generating extra income from carbon credits.
3. Energy saving initiatives becomes more popular because of the awareness generated by carbon credits.
4. It is also an alternative investment for people who are looking for some innovative investments.