How do companies in the electric vehicle sector make money from carbon credits?
Hello people. This article is on How do companies in the electric vehicle sector make money from carbon credits. Carbon credits could be used to cut the high costs involved with setting up charging stations for electric vehicles.
A carbon credit represents a reduction of one tonne of carbon dioxide emissions and would be available for sale. The carbon credits can be sold by entities investing in installation of electric vehicle chargers to firms or companies looking to go carbon neutral, and could generate a 5-10 percent return on capital over 10 years.
In the next few years, this credit-trading approach can grow significantly. The government is planning to introduce a credit system based on carbon dioxide emission to incentivise automobile manufacturers make electric vehicles or low-emission vehicles, as it strives to move towards green mobility in a big way
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Tesla, being a manufacturer of electric vehicles and a contributor to the green energy ecosystem, earns regulatory carbon credits and sells these to other companies which rely on fossil fuels for their energy needs.
Automakers buy regulatory credits when they aren't able to produce enough low-emission or zero-emission vehicles on their own to satisfy environmental regulations around the globe.
Some banks have created a new revenue stream for EV charger owners. Businesses can now be paid for the carbon offset credits they create when EVs charge on their properties, adding to the positive economic and environmental benefits of workplace and public charging,
EV charging helps reduce greenhouse gas emissions. To quantify these reductions, the some banks have developed a methodology that enables the creation of carbon offset credits. The credits are determined by how much electricity is dispensed by the charger and the carbon intensity of the electricity delivered.
In some markets, public EV charging currently runs on thin margins. Without chargers in their vicinity, people are less likely to buy EVs. If the utilization of public chargers is too low, there may not be enough revenue to match the costs of hosting them.
Carbon offset credits help cover that margin and support their deployment in new territories. This system provides a new funding source from carbon capital markets and accelerates EV charger deployment across the world.
If India successfully shifts to shared, electric and connected mobility, it could potentially help India save up to $300 billion (Rs 20 lakh crore) in oil imports and nearly one gigatonne of carbon dioxide emission by 2030.
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