Geothermal Energy Systems
Building Blocks of Sustainability
Carbon Credits (CER's)
What is a carbon credit?
• A carbon credit is a stipulated saving in energy usage, which reduces the carbon footprint of a particular installation.
• One carbon credit is earned when 1 Megawatt of energy is saved.
What is a carbon credit trading?
• In 1997 some 140 countries, including South Africa signed the Kyoto Protocol (KP).
• The Kyoto Protocol stipulates that these countries have committed themselves to cutting emissions of CO2 and other greenhouse gases to a level at least 5.2 per cent below 1990 emissions by 2008 to 2012.
• The implementation of the Kyoto Protocol and the EuropeanTrading System for Carbon Credits (ETS) is a legally binding framework for the reduction of greenhouse gases.
• The European industry is now under legal obligation to significantly reduce its carbon footprint.
• To achieve the mandatory emission reduction targets, a European company that causes pollution has three options:
1. Do nothing and pay a fine of € 100 per ton of CO2 emission.
2. Go through the relatively expensive exercise of reducing emissions in Europe (up to € 40 per ton of CO2).
3. Buy carbon credits from emission reduction projects from other countries such as South Africa (€ 15-20 per ton of CO2 saved) which can then be offset against their emissions.
• The result is that a large number of companies are now buying carbon credits to meet their obligations.
• Carbon credits (CERs) may now be bought and sold and are now freely traded on several carbon exchanges in Europe.
Important
It is important to note that the current Kyoto agreement runs until 2012, after which a new agreement will come into force. At the present time the details of the new agreement have not been finalised, but it is expected that they will provide for more stringent requirments for the reduction of carbon emissions from both the public sector and governments of developed AND developing countries such as South Africa.
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