Carbon retirement
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Carbon retirement is a mechanism within emission trading schemes, notably the European Union Emission Trading Scheme (EUETS), designed to mitigate climate change by permanently removing emission allowances from circulation. These allowances, or EU Emission Allowances (EUAs), permit holders to emit a specified amount of carbon dioxide. By purchasing and retiring these allowances, companies effectively reduce the total emissions cap, compelling others to decrease their emissions to stay within the tightening limits. This process not only contributes to the overall reduction of carbon emissions but also incentivizes industries to adopt more sustainable practices due to the increasing scarcity and cost of allowances.
Additionally, carbon retirement encompasses the purchase and permanent retirement of carbon credits, which are certificates representing the prevention of greenhouse gas emissions or the removal of these gases from the atmosphere. Companies often use these credits to offset emissions from operations that are challenging to eliminate immediately, thus contributing to their environmental responsibility efforts.
Carbon retirement involves retiring carbon credits – certificates representing reduced greenhouse gas emissions or greenhouse gasses (GHGs) removed from the atmosphere. The company could then purchase and “retire” carbon credits as compensation for emissions from sources that will eventually be eliminated.
Historical Analysis and Media Coverage of Carbon Retirement
2008 - 2008: An article in the journal Energy Policy described carbon retirement as "straightforward and transparent," highlighting its advantages over traditional offsetting projects, which can involve complex methodologies, brokers, intermediaries, and concerns about additionality [1]
2020 - McKinsey Sustainability reported a significant uptick in the retirement of carbon credits, with approximately 95 million tons of CO2 equivalent (MtCO2e) retired in 2020 alone, more than doubling the figures from 2017..[2]
2022 - British media outlet CarbonBrief observed that 146 million carbon credits were retired from the four largest registries for carbon-offset projects in the voluntary market, indicating a substantial increase in the volume of retired credits within just three years.[3]
References
- ^ Rousse, Olivier (January 2008). "Environmental and economic benefits resulting from citizens' participation in CO2 emissions trading: An efficient alternative solution to the voluntary compensation of CO2 emissions". Energy Policy. 36 (1): 388–397. doi:10.1016/j.enpol.2007.09.019.
- ^ "Carbon credits: Scaling voluntary markets | McKinsey". www.mckinsey.com. Retrieved 2024-02-21.
- ^ Pearson, Josh Gabbatiss, Tom (2023-09-28). "Analysis: How some of the world's largest companies rely on carbon offsets to 'reach net-zero'". Carbon Brief. Retrieved 2024-02-21.
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