Q. Consider the following statements:
1.Carbon credits are certificates issued by the government that allow a company to emit a specific amount of carbon dioxide.
2.The price of carbon credits is set by the national government where the company operates.
3.Carbon offset is a tax levied on industries emitting carbon dioxide.
How many of the statements given above are correct?
Answer: A
Notes:
Explanations –
Statement 1 is correct. Carbon credits are permits issued by governments or regulatory bodies under cap-and-trade systems, allowing companies to emit a specific amount of carbon dioxide, usually measured as one tonne of CO2 per credit.
Statements 2 and 3 are incorrect. The price of carbon credits is determined by market forces, such as supply and demand, in both compliance and voluntary markets, rather than being directly set by governments. Carbon offsets are not taxes but voluntary or mandatory mechanisms where companies invest in projects that reduce or remove emissions (e.g., reforestation) to compensate for their own emissions.
Source: The Hindu
