These are scientific units. You earn them by being green. You lose them if you behave in a polluting manner. Where does one get them and who taketh them away? Good questions.
Consider this? If your great grandfather left you a 200 acre woodlot on the Eastern shore you may qualify for carbon credits.
Acadian forest a unique ecosystem only found in eastern North America covers most of coastal Nova Scotia. In the world of carbon credits this forest is widely regarded as the 'Fort Knox of carbon storage".
Recent studies by Natural Resources Canada, and the University of Washington State have shown over 40 to 80 year cycles an Acadian forest, or a Kyoto forest (1990) located in Nova Scotia holds 140 to 180 metric tons of CO2 per hectare. This sequestered amount of carbon per metric ton equals or exceeds that found in a tropical rain forest.
Now you realize the potential of that 200 acre woodlot, you want to know where to pick up your cheque. Right? Not so fast. First you will need a qualified person to cruise your property count your trees and prepare a report. Somehow this report morphs into carbon credits. The number of credits is based on the tonnage of C02 your forest will hold.
Expect rules to apply. Tough rules, like you can not cut down all the trees. If you have a forest fire look for fine print that reduces your carbon credits. Do not let these obstacles overshadow the expectation that carbon credits will increase in value as pollution allowances continue to shrink.
Forest land will take on a whole new value during re-growth periods where historically, there has been zero income for owners. Forest industries will have huge incentives to replant and fertilize clear cut areas to increase their carbon credits. This sounds pretty good.
We sense a whole new green industry percolating. There will be regulators, cruisers, brokers and documentation.
So now you have a few thousand carbon credits you want to know where you can sell them. Well this new industry ain?t dumb. It?s setting up exchanges. In Canada there is the Montreal Climate Exchange and soon there will be others most likely in Toronto and Vancouver. If you want to sell credits today you need to go abroad and hook up with the European Climate Exchange.
Expect derivatives to emerge and bonuses to be paid.