Colony’s Carbon Credit Trading

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A successful market-based program requires just a few minimum elements. All the following  are essential to an efficient and effective program: 

This is a limit on the total tons of emissions that can be emitted. It  provides the standard by which environmental progress is measured, and it gives tons traded on the  pollution market value; if the tons didn’t result in real reductions to the atmosphere, they don’t have any  market value. 

Each allowance gives the owner the right to emit one ton of pollution at any time. Allocation of allowances can occur via several different formulas. 

 A source that reduces its emissions below its allowance level may sell the extra allowances to another source. A source that finds it more expensive to reduce emissions below allowable levels may purchase allowances from another source. Buyers and sellers may “bank” any unused allowances for future use. 

At the end of the compliance period (e.g., one year, five years, etc.), each source must hold several allowances equal to its tons of emissions for that period and must have measured its emissions accurately and reported them transparently. 

Sources have flexibility to decide when, where and how to reduce emissions.