The European Commission plans to allow countries to use carbon credits to “outsource” some of their climate responsibilities to poorer nations beginning in 2036. This move aims to help meet the Commission’s climate goals for 2040. Carbon credits have become a key strategy for many countries and companies aiming to cut their emissions. However, opinions vary. Some argue any emission reduction is beneficial, while others feel this system lets large polluters avoid real change.
So, what are carbon credits? They are permits that allow a company or country to emit a specific amount of carbon dioxide or other greenhouse gases. For instance, ByteDance, the parent company of TikTok, bought over 100,000 tons of carbon credits from Rubicon Carbon to achieve its 2013 goal of carbon neutrality. In a global context, a country unable to meet its emissions cut targets can purchase credits from others that have undertaken sustainability projects, like reforestation.
The carbon credit market typically operates on a cap-and-trade system. Governments set a limit on emissions for specific industries. This cap is divided into allowances that companies can buy and sell. The idea is that trading creates financial incentives to cut emissions in cost-effective ways. Emitters can also invest in projects in developing countries, which aren’t bound by set emissions targets.
Are carbon credits effective? They are a contentious topic. Proponents argue that carbon credits help fund projects aimed at reducing CO2 levels in developing countries while giving companies flexible options for meeting their emissions goals. Barbara Haya from the Berkeley Carbon Trading Project states that the “atmosphere doesn’t care where the emissions reductions happen.” Yet, critics believe carbon credits can distract from the critical work of eliminating fossil fuel consumption, which is the primary driver of climate change. This concern is shared by many experts who point out that the current framework may not guarantee that the carbon credits accurately represent real, measurable reductions in emissions.
According to a recent study published in the journal *Earth’s Future*, existing protocols often fail to ensure that carbon credits are both high-quality and accurately reflective of the carbon offset they claim to provide. Ana Toni, CEO of the COP30 climate summit, stressed that while credits play a role, they shouldn’t be the main focus. She noted, “If the amount of credits is significant, you’re not changing your own economy.”
In summary, while carbon credits may be helpful as part of a broader strategy against climate change, experts suggest they should complement rather than replace direct emission reductions.