In this day and age, the environment has become widely polluted and many of us are experiencing the effects of weather changes as a result of the greenhouse gasses. Due to this, a large scale environment measure has been created. Called the Kyoto Protocol, the worldwide collaborative measure is delegated by more than a hundred countries aiming to achieve a greener environment for the next generation.
One of the effective instruments in limiting greenhouse emissions is the setting of cap for each country on how much CO2 emissions they are allowed to emit. The amount limit is calculated in carbon credits. Each carbon credit equals to a ton of carbon dioxide emitted. Since not all groups are able to use the cap given to them, they are able to sell their remaining carbon credits and is thus the reason why carbon credits can now be considered as a commodity. Due to this, you can now buy and sell carbon credits depending on how you need it.
A certain country will have a certain cap of carbon credits. These credits will then be distributed to different groups such as industries and businesses. If a certain group exceeds their limit of carbon credit, they can simply buy carbon credits from other groups that have extra that they will not be using. As long as the cap for the country is not exceeded, then the carbon credit remains a commodity that industries or businesses can invest on. While it may not actually be a physical commodity, the environmental factor that it carries makes it very much like a physical commodity that you can buy and sell when needed.
Carbon tax is a profitable and ethical way of preventing the deterioration of our home planet. Every day, all of us use energy and natural resources that does damage and degradation to our home planet. By limiting this use and imposing certain taxes to pollution and other related factors detrimental to the environment, we are in turn helping to create a better world for the future generation by not undermining the earth as it is today.