General information on the Specific “Externalities” that Carbon Credit Employed to

Tackle
Carbon credits are a market-based approach to controlling carbon emissions. The mechanism
operates by setting a cap on the total amount of greenhouse gas emissions that industries or
countries can emit. The cap is then divided into allowances, which are distributed to the
industries or countries. If an industry or country emits more carbon than its allowance, it must
purchase additional carbon credits from projects that reduce or remove carbon emissions.
The externalities associated with carbon credits focus on the benefits and drawbacks of this
market-based approach. One of the primary benefits of carbon credits is that it incentivizes
the development of renewable energy projects. Renewable energy projects such as solar,
wind, and hydroelectric power have been shown to reduce greenhouse gas emissions
significantly. By providing a financial incentive for these projects, carbon credits help
facilitate the transition towards a low-carbon economy.
However, critics of carbon credits argue that it does not address the root cause of climate
change, which is the overreliance on fossil fuels. The system can also be complex and
opaque, which can lead to fraud and corruption. Additionally, some argue that carbon credits
create a moral hazard, as the purchase of credits may give industries or countries a false sense
of accomplishment, leading them to continue emitting carbon at high levels.

How the Aspect of “Carbon Credit” Differs in Different Regions or Countries

Carbon credit practices differ in different regions and countries. In countries such as Europe,
the European Union Emissions Trading System(EU ETS) is the primary mechanism for
reducing carbon emissions. Under this system, the EU sets a cap on the total amount of
greenhouse gas emissions allowed in the region, and industries must purchase carbon credits
to offset their emissions. The EU ETS has been successful in reducing greenhouse gas
emissions, although some critics argue that the cap is too high, and the system has not been
effective in reducing emissions in certain sectors such as transportation.
In other regions such as the United States, carbon credits are not widely used at the federal
level. However, some states have implemented their own carbon credit programs, such as
California's cap-and-trade system. In these systems, industries must purchase carbon credits
from projects within the state or region to offset their emissions.
Carbon Credit Practice in Cambodia: Fact and Progress
Cambodia is a country in Southeast Asia that has been experiencing rapid economic growth
in recent years. However, this growth has come at the cost of increasing greenhouse gas
emissions. The Cambodian government has recognized the need to address climate change
and has taken steps to implement carbon credit projects.
One example of a carbon credit project in Cambodia is the REDD+ project. REDD+ stands
for Reducing Emissions from Deforestation and Forest Degradation, and it is a program that
aims to reduce greenhouse gas emissions by preserving forests. The Cambodian government
has been involved in the REDD+ project since 2010, and it has been successful in reducing
deforestation rates in the country.

The REDD+ project works by providing financial incentives to communities and individuals
to protect forests. The project also includes capacity building and awareness-raising activities
to promote sustainable forest management practices.

Reflection on the Pros and Cons of “Carbon Credit” and Why It Does Not Necessarily
the Best Option to Tackle Climate Change
The pros and cons of carbon credits have been widely debated. On the one hand, carbon
credits can incentivize the development of renewable energy projects and other initiatives
that reduce greenhouse gas emissions. They can also provide a financial incentive for
industries and countries to reduce their carbon footprint.

On the other hand, carbon credits do not address the root cause of climate change, which is
the overreliance on fossil fuels. The system can also be complex and opaque, which can lead
to fraud and corruption. Additionally, some argue that carbon credits create a moral hazard,
as the purchase of credits may give industries or countries a false sense of accomplishment,
leading them to continue emitting carbon at high levels.

Proposed Solutions to Improve the Overall Efficiency and Effectiveness of “Carbon

Credit”
There are several proposed solutions to improve the overall efficiency and effectiveness of
carbon credits. One solution is to implement a more careful planning process that takes into
account the social, economic, and environmental impacts of carbon credit projects. This
would ensure that the projects are sustainable and beneficial to the communities and regions
where they are implemented.

Another solution is to implement different incentive schemes that reward industries and
countries for reducing their carbon footprint. For example, instead of just allowing industries
to purchase carbon credits, governments could provide tax incentives or subsidies for the
implementation of renewable energy projects.
Furthermore, there is a need to create a more transparent and accountable system for carbon
credits. This would involve setting clearer guidelines and standards for the development and
implementation of carbon credit projects. The system should also include independent
monitoring and verification to ensure that the projects are delivering the promised reductions
in greenhouse gas emissions.

A Final Thought on the Overall “Carbon Credit Scheme”

The carbon credit scheme is an important mechanism for reducing greenhouse gas emissions
and addressing climate change. However, it is not a silver bullet and should be viewed as part
of a broader strategy to reduce carbon emissions and transition to a low-carbon economy.
While there are criticisms of the carbon credit system, it is important to recognize the
progress that has been made in reducing greenhouse gas emissions through the
implementation of carbon credit projects. As countries and industries continue to develop and
implement new projects, it is essential to learn from past experiences and improve the overall
efficiency and effectiveness of the carbon credit system.

In conclusion, the externalities associated with carbon credits focus on the benefits and
drawbacks of this market-based approach. Carbon credit practices differ in different regions
and countries, with Cambodia being an example of a country that has implemented carbon
credit projects, such as the REDD+ project. While there are pros and cons to the carbon credit
system, proposed solutions such as more careful planning, different incentive schemes, and
creating a more transparent and accountable system can improve its overall efficiency and
effectiveness. Ultimately, the carbon credit scheme should be viewed as part of a broader
strategy to tackle climate change and transition to a low-carbon economy.

References:
-International Emissions Trading Association. (2021). What are carbon credits? Retrieved
from: https://www.ieta.org/resources/What_are_carbon_credits.pdf
-European Commission. (2021). EU Emissions Trading System (EU ETS). Retrieved
from: https://ec.europa.eu/clima/policies/ets_en
-California Air Resources Board. (2021). Cap-and-Trade Program. Retrieved
from: https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program
-United Nations Development Programme. (2021). Cambodia. Retrieved
from: https://www.undp.org/content/undp/en/home/countryinfo/KH.html
-United Nations Framework Convention on Climate Change. (2021). REDD+. Retrieved
from: https://unfccc.int/topics/land-use/workstreams/reducing-emissions-from-
deforestation-and-forest-degradation-and-the-role-of-conservation
-Climate Focus. (2021). Carbon credits: pros and cons. Retrieved
from: https://climatefocus.com/news/carbon-credits-pros-and-cons