Trade and investments are two important terms, which are used in the structure of climate change policies, and carbon credit investments have been the main contributors which reduce global greenhouse gases. The trade related investments increased recently, but the trade also effected GHG emissions in various other ways. It also reduced dependency on non-renewable source of energies. Trade promoted growth and trade also promoted production and increased the demand for the environmental-friendly goods. Trade and carbon credit investments are interrelated and both are very important for reducing the global emissions.

Trade and investments are two activities, which are considered effective in reducing carbon emissions, and governments of different countries have been initiating plans to support the mechanisms because it benefits the economy. Some of the benefits of these developments are –

• Trade in carbon credits allowed climate friendly development in projects which promoted the development of climate smart technologies, and the use of renewable sources of energies.

• The investments to promote environmental friendly policies and methodologies are mostly optimized and equitable.

• The trade related policies on climate change are sustainable and based on climate smart growth.

• These policies are structured through measures, economic incentives, and investment policies, which have direct impact on the economy. Regulatory policies include regulations labelling and standards, and economic incentives include tradable permits, taxes and subsidies.

Impact of global warming on climate

Most of regions of the world are facing the heat of global warming. Climate change has resulted in causing untimely and unpredictable floods and destruction of crops. The droughts, floods and desertifications are increasing in certain regions, which also caused a decrease in food production. There has been an increase in investments in agricultural land in many parts of the world, which enhances food security and also provides a method to earn high returns to the investors as the price of food grains is increasing along with the increasing demand of food grains.

Investors prefer to make investments in forest carbon credit sequestration and generation projects. The global trade in carbon credits is increasing, which helps to minimize emissions. It has been found that total trading is not in accordance with the rate at which global warming is affecting the earth’s environment. If steps are not taken to reduce the impact of global warming, it can result in increase of temperature by more than four degrees Celsius, which may have disastrous impact on life on earth.