Businesses and countries alike are finding new ways to protect the environment by reducing emissions of harmful pollutants. One of these ways is a market-based approach called carbon trading which provides economic incentives for business firms that limit their output of carbon emissions. These carbon trading markets are beginning to form all around the world and the country of Kenya plans to launch Africa’s first carbon exchange.

The newly formed exchange is expected to be open for business by the middle of 2011 and will enable all African countries to sell their “carbon credits”. Countries and businesses can earn a carbon credit by reducing their carbon emissions below a previously set limit. One carbon credit is equal to one ton of carbon dioxide, or in some markets, a carbon dioxide equivalent gas. Each credit is worth a certain amount of money providing a major incentive for companies to decrease carbon emissions.

Africa hopes the trade in carbon credits will inspire investments in renewable energy and forestry projects. In fact, sometimes polluting industries in wealthy countries will pay for these clean development projects in other countries. To start the process, Kenya’s government plans to support forestry development and estimates that its largest forest, the Mau, has the potential to earn the country close to two billion dollars per year over the next 15 years. This project will be difficult to sustain but is well worth the effort.

Tackling the problem of climate change is a difficult task, but Kenya’s carbon exchange platform is a good place to start. Providing incentives for companies and countries who acknowledge environmental issues may also have positive results on the economy as well. Over the next few years, Africa hopes results will show in both economic success and climate sustainability.

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