Carbon Credits Utility

Essentially, carbon credits are an artificial way of creating a market for supply and demand for carbon credits. Based on the Kyoto Convention rules, GHG emitters (generally large industries, i.e. fixed resources) are given a series of permits to emit, which is supposedly lower than their average annual greenhouse gas emissions.

In practice, if a company receives a permit to emit 100T CO2 (tons of CO2) but they need to spend 150T CO2 to keep their operations, consequently, they will have to buy 50T CO2 in Carbon Credits from someone allowed to emit them — in this case, us! It is important to point out that after an organization or an individual buys a carbon credit the credit is permanently retired, so it can‘t be reused, only the owner (who possesses it) can be changed via a trade or transaction.

Moreover, it is important to mention that the company is not obligated to buy the credits, they also have the option of reducing their emission of GHG, which is usually not their preferred choice. In addition, a noticeable thing is that the permits for big industries are decreasing every year, meaning that the demand for Carbon Credits will intensify in the coming years.

The prices for 2021 were expected to average around $0.40 before doubling it by the end of this decade, which have already been massively surpassed. Having all of this mentioned above in mind, it is relatively easy to reach the conclusion that demand is something that is not missing in this market. The supply matter and competition will be discussed a few pages down on this whitepaper.