Carbon Trading and Investment: Can there be more to it?

Acid Rain was a concept introduced in the middle of the 19th century by English Chemist Robert Angus Smith. He later published a paper in 1852 and a book in 1872 , “Air and Rain: The Beginnings of a Chemical Climatology”. He first used the term Acid Rain in that book. Even though the chemistry and mechanisms explained in that book are still valid and used, his work went completely unheard by the scientific community.

Acid rain later turned out to be a harsh reality for the entire world. Lakes in Norway started seeing scarcity of salmon, damage to historical buildings, damage to crops etc. Since Acid rain is something that we all are fairly familiar with, I will be using the help of an infographic to show how it is formed and its impact.

Acid Rain Pathway

In the US Acid rain was first identified in North America at Hubbard Brook, Connecticut in the mid-1960s.It was later shown that this acidity was due to the SO2 released from the factories.

With increasing and alarming negative effects, in 1990 world’s first cap-&-trade system was established to control pollution.The objective was to reduce the SO2 release from power plants to 50 percent below 1980 levels by 2010.The program was a huge success and the goals were achieved by 2007.

The basic idea was to allow all power plants to purchase permits which gives them the maximum amount of SO2 they are allowed to release every year. If any factory purchases 2500MT of SO2 permit, they are not allowed to increase the release (or will have to purchase or pay a fine for it). If the factory ends up releasing less than 2500MT of SO2, then they are allowed to trade that permit level with any other factory to help them improve their output. In this way a market-place is established which allows companies to trade the cap levels of SO2. The government was able to maintain a reasonable cost to the SO2 in order to have industries buy and sell at a price which is neither too less nor too high.

The program was so successful that it fueled the thoughts for an international CO2 Cap & Trade system. Currently several countries in the world have a C&T system running, EU (European Union) having the biggest market of all. Almost all the European Countries have participated in this Cap & Trade market system. The results of this carbon market are debatable. Some consider this to be a success however others consider this to be a failure and a scam.

There are some great articles and videos available where one can learn the concept of how cap and trade works and how successful it is.

Any system will always work perfectly unless there is a greed for money involved. Unfortunately, there is always another aspect of every green initiative for any company and that is spending more money. Hence, it is not easy to always have a dedicated effort for every organization to have a green initiative

Currently the way global organizations are trying to achieve Net Zero is by having a Carbon Offset Strategy. The strategy is pretty straightforward which requires 2 steps

  1. Measure the carbon emissions for the operations performed.
  2. Invest a similar carbon reduction amount in companies/ stocks/ credits/ EFTs which are carbon friendly.

So the amount of carbon produced due to one activity is balanced by a similar amount of carbon reduction. This strategy is widely popular right now and has given rise to several options for carbon investment for everyone.

However, the biggest concern for this model is that core activity which is causing the emissions is not looked into. This model allows the organizations to offset the focus to not actually reduce the emissions from the activity.

  1. The carbon emissions calculator should be accurate enough (or overestimating enough) that it provides a realistic emission number.
  2. The organization should be ready to account for almost every minor and major activity which has a carbon impact.
  3. Too much generalization or too much granularity, both can have an adverse effect and can lead to underestimating the CO2 emissions.

In order to have a more responsible act towards Earth and our own sustainability, strict guidelines should be established towards actual implementation. The companies should be audited if an effort was taken to actually reduce the emissions. Few points that can be easily audited and are already covered under majority HSE policies are

  1. Regular engine maintenance
  2. Ensure reduced spill and waste
  3. Ensure reduced plastic usage
  4. Ensure reduction in emissions every 2-3 years by implementing new technology

Although there are regulatory authorities which do keep a check on HSE standards of every organization, and very strictly, there should be credits offered even for the efforts which have caused a reduction in CO2 emissions.

Apart from the HSE efforts, it is not correct to promote the research or efforts made only towards CO2 capturing or direct green impact. There is various research being done towards improving the internal combustion engines, emission performance, synthetic plastic, batteries, pyrolysis, alternative sources etc.

  1. Porsche Working on Synthetic Fuel to Make ICE Cars as Clean as EVs:
  2. Cold Plasma Pyrolysis: How We Can Turn Plastic Waste Into Clean Energy and Useful Products in Seconds:
  3. New process makes ‘biodegradable’ plastics truly compostable:
  4. Geothermal energy and the environment:,power%20plants%20of%20similar%20size.

Above are a few examples of work being conducted in the area of reducing the overall impact. It is essential that these efforts are not just recognized by the government and specific fields but also by everyone.

If there can be a market for carbon where people can invest in carbon credits, shouldn’t there be a market where people can read and invest in such research technologies which have an indirect but yet extremely significant impact on the overall energy sustainability.

I will try to expand more on this in the coming articles.


One thought on “Carbon Trading and Investment: Can there be more to it?

  1. Good article Aman. A large part of the SOx and NOx reduction came about by using more efficient technologies, not just from the cap and trade system. That same philosophy, improved technologies, needs to be an essential part of COx reduction initiatives as well besides carbon offset schemes. Automation is also key to reducing or eliminating tasks that humans do right now and are contributing to a larger CO2 footprint.


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