As the world is facing huge pressure of global warming every effort seems to be fading to save the world. In this chaotic world governments across the worlds are coming together to fight however they can. In this is present carbon credit the ghostly universe that has been existing for a very long time but was often discarded or not given the due attention.

But lately, everyone is talking about carbon credits, it is a hot market, hitting all-time highs in volume and on track to be in trillions. But the first question is what are carbon credits. Let’s dive deep into this.

WHAT ARE CARBON CREDITS?

Carbon credit is a kind of permit that represents 1 ton of carbon dioxide removed from the atmosphere. They can be purchased by an individual or a company to make up for carbon dioxide emissions that come from industrial production, delivery vehicles or travels.

These credits are mostly created through agricultural or forestry practices to reduce, destroy or capture emissions. The example above is called the voluntary market but there is something known as compliance market.

COMPLIANCE MARKET?

In compliance market, government set a cap on how many tons of emission certain sectors can release. For instance, it some company goes over the prescribed emissions limit, it must buy or use saved credits to stay under the emissions cap. This is done under a cap-and-trade market.

Article 6 of the 2015 Paris Agreement tasks national leaders with figuring this out on a global scale. So far, about 64 carbon compliance markets are now in operation around the world, the World Bank reported in May. The largest carbon compliance markets are in the European Union, China, Australia and Canada.

HOW BIG IS THE MARKET AND WHERE DOES INDIA FIT IN?

The voluntary market is on track to reach a record of $6.7 billion at the end of 2021, according to a September report from Ecosystem Marketplace. Currently, traders in the European compliance market project carbon prices to increase 88 percent to about $67 per metric ton by 2030, according to a survey released in June by the International Emissions Trading Association.

As far as India is concerned the market was present from 2012 but no was aware or to be precise interested in the process. But recently a lot of industries have started showing their interest in the game. Talking about numbers currently India has an economy of $2.5 trillion and carbon credit has a valuation of $5 trillion as of now. Talking to a leading solar company owner and an environmental enthusiast he told that the pace carbon credit market is picking it will definitely reach up to $11 trillion by 2050.