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Q15 (IAS/2011) Environment & Ecology › Climate Change & Global Initiatives › Carbon pricing mechanisms Answer Verified

Regarding “Carbon credits”, which one of the following statements is not correct ?

Result
Your answer: —  ·  Correct: D
Explanation

The carbon credit system was established as a market-based mechanism under the Kyoto Protocol [3]. Credits are awarded to entities that reduce greenhouse gas emissions below a specified standard or quota, effectively representing one tonne of carbon dioxide equivalent removed or prevented from entering the atmosphere [1]. These credits can be traded in market-oriented systems, allowing countries or companies to sell their surplus credits for profit [4]. However, the statement that the United Nations Environment Programme (UNEP) fixes the price of carbon credits is incorrect. In reality, carbon credit prices are determined by market forces of supply and demand within various trading schemes, such as the Clean Development Mechanism (CDM) or the European Union Emissions Trading System (EU ETS), rather than being administratively fixed by a UN body.

Sources

  1. [1] Environment and Ecology, Majid Hussain (Access publishing 3rd ed.) > Chapter 6: Environmental Degradation and Management > carBon crEdIt. > p. 55
  2. [3] Environment, Shankar IAS Acedemy .(ed 10th) > Chapter 29: Environment Issues and Health Effects > Carbon market > p. 425
  3. [4] Environment, Shankar IAS Acedemy .(ed 10th) > Chapter 21: Mitigation Strategies > 21.4. CARBON OFFSETTING: > p. 284
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