Basically the carbon credit for emissions reduction programs are a way to cap or limit the amount of carbon in the form of greenhouse gases that industries can produce. Carbon, in the form of greenhouse gases, is largely produced in the industrial nations of the world but has become more prevalent in many of the developing nations. One reason for this is that coal and other oil based fuels are less expensive than alternative fuels, resulting in a lower cost of production for these companies but an accompanying higher production of harmful carbon.
Carbon credit for emissions reduction programs or schemes came about as a way for national and international industries and organizations to control the amount of fossil fuel emissions in some type of standardized way. The terms of the agreement were set in the Kyoto Protocol and then further refined and determined in the later Marrakesh Accords, with allocations for carbon credit for emissions reduction included in the agreement. Each country is allowed so many carbon credits, which are equivalent to acceptable fossil fuel emissions. The individual countries that signed off on the Kyoto Protocol then allocate the total carbon credits within their various industries. Each country manages each own credit allocation that is different based on the types and amount of industry. After the allocation is made to the plant, manufacturing organization or business, the company is then responsible for staying within the quota allocated by their own government. The carbon credit for emissions reduction program provides a type of trade program that different industries and companies can trade extra, unused carbon credit for emissions reduction within their facility, to another company that is getting close to over-using their limit.
Through this program the stabilization of the use of carbon credit for emissions reduction is proving to have a great deal of positive impact on the amount of greenhouse gases. Companies that use less than their allocated carbon credits are able to trade in their efficiency for real profit, whereas the companies that are not staying within the guidelines are needed to pay more for their inefficiency in production. Although some companies are still producing more carbon, overall there is a balance internationally of production of carbon.
The only issues with using the carbon credit for emissions reduction program developed through the Kyoto Protocol is that it has not been accepted or carry outed by many of the leading carbon emissions producing countries. Some countries have also included a stage type carry outation of the Protocol and are just now adapting full use of the carbon credit program.