There is a Price for Pollution, and companies are heavily involved in pricing carbon to meet Environmental Regulations. Today, a Cap-and-Trade system exists, where the government sets an overall ceiling on emissions from key industries.
The idea here is that instead of using regulations to force companies to curb their emissions, polluters can be made to pay for every ton of CO₂ they emit, providing them with an incentive to lower emissions on their own.
Cap and Trade System. Image Courtesy: Legal Planet
Companies, however, in order to meet these strict caps, look to buy credits. This has resulted in a secondary market of buying and selling these precious carbon credits between companies. “Green-Companies” tend to be a large benefiter of this policy and rightly so. Tesla comes to mind and the ridiculous amounts of money they’ve made selling credits!
Automakers such as GM & Fiat, paid Tesla a Record $354 Million Last Quarter!
Imagine giving millions to your biggest competitor & disruptor in the industry to meet environmental regulations. Since 2012, Tesla has made more than $1.7 billion selling regulatory credits to other automakers!
This high cost has forced many businesses to formulate strategies and products that are less carbon intensive.
Tesla sold a bunch of credits to GM. Image Courtesy: Delaware state regulatory filings
We discuss Carbon Pricing Market with Maria Fujihara, Founder & CEO of SINAI Technologies a Y-Combinator backed company that provides automated monitoring & reporting to help companies price carbon more effectively! The first step to combating climate change for businesses is for them to understand their contributions to it & SINAI is leading the efforts on Carbon Finance! Listen: