Question: What are carbon credits and how can they be used?
Answer: Carbon credits were firstly introduced as a safety measure intended to reduce carbon dioxide emissions. All countries representing parties to the Kyoto Protocol receive these permits, which must be redirected to final operators, using them to compensate the emissions of carbon dioxide or other equivalent emissions.
Technically speaking, a carbon credit represents a certificate which entitles the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas, with a carbon dioxide equivalent. In a very rudimentary hypothesis, anyone can imagine that certain sources can easily exceed the emission limits provided through the carbon credits, introducing in this manner the necessity to acquire a greater number of permits, used to cover their extra emissions.
The carbon credits Romania system can still be considered as facing an incipient phase, but this appears to be quite an advantage for various investors. Our country was introduced to carbon allowances scheme in 2005, but the trading process was not active until 2008.
The highly polluting companies received an average of 70% out of all carbon credits provided to Romania. The rest of them were generally given to smaller companies, such those involved in ceramic manufacturing industry, sugar processing industry or the beer manufacturing market.
The Romanian carbon credit investments constantly developed, educating the participants in a positive direction. Operators reducing their emissions gradually started to sell their surplus carbon credits.
Question: Is there a business opportunity in investing in carbon credits, in Romania?
Answer: Apart from the classic situation, when an operator simply reduces emissions in order to save the carbon credits, there are several other ways of procurement of carbon incentives.
Probably the most debated cases refer to replacing the use of dirty fossil fuels with renewable energy and also capturing and storing the already released carbon in trees and other plants.
First example refers to renewable energy projects, such as wind farms, solar power parks, hydroelectric energy projects or production and use of biofuels. Energy efficiency projects reduce the direct release of greenhouse gas emissions into the atmosphere.
This particular sector of renewable energy sources is being provided with a number of incentives which can conveniently generate profitable fluctuations inside the carbon credits Romania system. The past years’ investments in this field significantly increased, impressively diversifying opportunities. Participants on the carbon market Romania became familiar with most characteristics of this trading area, incessantly absorbing latest novelties in the domain.
Those involved in the carbon credit trading activities managed to establish a stable business environment, encouraging investments in this department and delivering a solid alternative for those involved in the renewable energy sector.
Another option to generate carbon credits deals with the process of capturing and storing already released carbon in trees and other plants. In a more approachable terminology, it simply refers to the protection of existing forests or planting additional trees and plants. There are strict regulations, concerning the issuance of these types of certificates for this particular kind of financial initiative and the project can be validated only on precise conditions.
There is an explicit set of regulations related to the installations analysis and monitoring of the project itself but, once approved, this business plan may reveal a totally unexpected source of profit.
It becomes obvious that the Romanian carbon credit investments domain can effectively be explored on one essential condition, and this refers to perfect understating of all legal aspects implied by the development process of a project intended to generate carbon credit incentives. Our lawyers can efficiently provide all judicial information regarding this topic, explaining every characteristic related to such an investment, and also suggesting important alternatives that might increase the overall value of the project.
Strategies in this department should be accurately evaluated and the project itself needs to be developed on a strong realistic basis. Darie & Manea, using the competent green energy lawyers in Romania, can deliver the necessary help and our team is able to guarantee the full success of this business approach. For a free case consultation, call us now.