Carbon markets were initiated back in 1997 subsequent to the Kyoto Protocol. What are they? They simply allow investors to trade both carbon credits and offsets at the same time, in favour of the environment.
They are lucrative because they turn CO2 emissions into a commodity and give it a price.
Carboncredits.com summarizes carbon credits as “when a company buys a carbon credit, usually from the Government, they gain permission to generate a ton of CO2 emissions.” Revenue generated from this transaction heads to regulators. Companies who end up with a lot of credits, can sell them to other companies.
Petrobras, Brazil’s state company, bought carbon credits for the first time to offset its emissions. Petrobras bought them from Envira Amazonia, an organization that protects the Amazon rainforest’s 39,000 hectare project.
South African global chemicals and energy company, Sasol Limited, recently signed a three-year agreement to work with international carbon solutions provider, Vertree Partners Limited, to access high-quality carbon credits and climate investments.
A statement from Sasol said a memorandum of understanding (MoU) was signed by the two companies, to devise robust pathways for decarbonisation, manage associated risks and make high-quality, high-impact investments in carbon reductions.
Speaking at the signing of the MoU, Sasol’s Vice President for Climate Change, Shamini Harrington said: “High-quality carbon credits can uplift communities and contribute positively towards national imperatives of alleviating poverty, unemployment and inequality while simultaneously meeting decarbonisation objectives. We are excited to start this journey with Vertree to put in place the tools and frameworks to ensure investment in credible carbon projects that deliver on these imperatives.”
In 2020, Sasol also bought more than 100,000 carbon credits from Bethlehem Hydro, to offset tax obligations.
Other companies that have bought carbon credits are Chevron, British Airways, Air France, Shell, and others.
But some environmental activists oppose carbon markets. This emerged at the recently held African Climate Summit, Priscilla Achakpa, of the Women Environmental Programme in Nigeria, said
carbon credits are not a solution, but a reminder that not all of Africa’s 1.3 billion people support richer countries using the continent’s green spaces to offset continued pollution.
Picture credits: ALO