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[DAILY CURRENT AFFAIRS, 25 APRIL 2023]

G-SECS

 
 
1.Introduction
 G-secs, or government securities or government bonds, are instruments that governments use to borrow money.
G-secs are different from everyday lending between two private individuals or entities:

(a) G-secs carry the lowest risk of all investments. After all, the chances of the government not paying back your money are almost zero. It is thus the safest investment one can make.

(b) G-Secs are different in the manner in which they are structured, and how their effective interest rates are calculated.

2. Calculation of G-secs Yields

  • G-sec yields change over time, often several times during a single day. This happens because of the manner in which G-secs are structured.
  • Every G-sec has a face value, coupon payment, and price. The price of the bond may or may not be equal to the face value of the bond.

Example: Suppose the government floats a 10-year G-sec with a face value of Rs 100 and a coupon payment of Rs 5. If one were to buy this single G-sec from the government, it would mean that one would give Rs 100 to the government today and the government would promise to –

(1) Return the sum of Rs 100 at the end of tenure (10 years)

(2) Pay Rs 5 each year until the end of this tenure.

  •  If G-sec yields (say for a 10-year bond) are going up, it would imply that lenders are demanding even more from private sector firms or individuals; that’s because anyone else is riskier when compared to the government.
  • If G-sec yields start increasing, lending to the government is becoming riskier.
  • If a government’s finances are sorted, more and more people want to lend money to such a G-sec. This, in turn, leads to bond prices going up and yields coming down.
 
 
Source: indianexpress

WAGNER GROUP

 

1. Context

After fighting erupted in Sudan’s capital Khartoum on April 15, 2023 questions have been raised over the involvement of the Wagner group, which has been active in African countries for years.

2. What is the Wagner Group?

  • The Wagner group is a Russian paramilitary organization headed by Yevgeny Prigozhin.
  • Though it has been reportedly engaged in counter-militancy operations in Africa, its involvement is believed to have a more extensive scope covering political, economic, and military fields.
  • There have also been reports of the group supplying arms and weapons, and training regional forces in fighting jihadist threats.
  • Despite its involvement in the Russia-Ukraine war, the Wagner group’s presence in Africa has continued.
  • By siding with the domestic actors in a civil war situation, the group’s actions have impacted the democratic process in Africa.
  • Additionally, the West has been raising concerns over human rights violations and abuse of civilians related to the Wagner group’s presence in Africa.

3. How active is the Wagner Group in Africa?

  • The Wagner group has been active in Sudan, Mali, the Central African Republic, Mozambique, and Libya in Africa.
  • The activities are related to providing direct support to authoritarian governments, supporting rival leadership engaged in internal wars, filling the void created by the withdrawal of the French military engagement, taking part in resource exploitation, etc.
  • The Wagner group presents itself as a security provider to a few governments, mostly authoritarian ones in Africa.
  • It has also been supporting rival leaders engaged in a civil war. 
Image Source: The Hindu

4. Wagner Group ties with Sudan

  • In Sudan, it began deployments during former President Omar al-Bashir’s rule in 2017.
  • The group’s ties with Sudan aimed at guarding mineral resources, notably gold mines, and therefore, supported Bashir’s government against international opposition.
  • It also played a direct role in suppressing the Sudanese uprising in 2019 that toppled Bashir’s regime.
  • In Sudan, Russia has recently forged a strong relationship with the Rapid Support Forces (RSP) and its commander, General Mohamed Hamadan Dagalo.
  • The latter is a rival leader fighting against the Sudanese army. However, there are, as of now, only speculations on Wagner’s involvement in the ongoing violence in Sudan.
  • Besides, Russia is set to sign an agreement with Sudan to build a military base in Port Sudan on the Red Sea.

5. Wagner Group in Different Countries

  • Interestingly, in the Central African Republic, the Wagner Group is active beyond being engaged in security-related activities. 
  • The Wagner group is also filling in the void created by anti-French sentiments which led to the withdrawal of the French forces from Africa.
  • In Mali, the Wagner group trains local forces and provides security services in fighting extremist groups.
  • Wagner’s deployment in Mali was followed by a nose-dive in France-Mali relations and the end of France’s Operation Barkhane.
  • A similar role of the Wagner group could be found in Burkina Faso.
  • The country is reportedly involved with the Wagner group to deal with surging jihadist violence.
  • After officially announcing the end of the French operation in November 2022, Burkina Faso turned towards Moscow taking similar steps as Mali did.
  • In Libya, approximately 1,200 Wagner mercenaries are believed to have fought for rebel leader Khalifa Haftar.
  • Libya witnessed a civil war for the entirety of the 2010s before a ceasefire which is holding tenuously.

6. What is the goal of the Wagner Group in Africa?

  • The primary goal of the group is to gain access to natural resources.
  • The Wagner group’s presence and moves make up one of the strategies to achieve this objective for the country.
  • Secondly, Russia sees the Wagner group as an instrument of diplomacy in Africa.
  • The Russian strategy in Africa comes with minimal cost economically but with heavy political returns.
  • Moscow secured 15 abstentions from African countries in the UN’s resolution condemning its aggression in Ukraine.
  • Moreover, Eritrea and Mali sided with Russia voting against the resolution.
  • And finally, Russia’s access to African mineral deposits is believed to be providing crucial financial support to continue the war in Ukraine.
  • For Russia, strong ties with African countries mean a pipeline of influence for Russia’s war in Ukraine.

7. Implications of Africa 

  • For African countries, increasing dependency on Wagner mercenaries implies more violence, intimidation, and uncertainties. 
  • The group posits a threat to democratic governance in Africa.
  • The collapse of relations between the West and Sahel countries, especially Mali and Burkina Faso, paved the way for Russia to position itself as an alternative.
  • In time, Russian gained leverage in Africa through its assistance without conditionalities.
  • However, deepening relations between African leaders and Russian mercenaries pose a significant threat to democratic values.
  • Increasing trends among African governments seeking Russian mercenary assistance for mounting security concerns indicate increasing authoritarian footprints across the continent.

8. Status of Wager Group in the World and Inside Russia

  • According to the UN’s International Convention against the Recruitment, Use, Financing, and Training of Mercenaries, the states should bear the responsibility for the activities of the mercenaries who violate principles of international law which threaten sovereign equality, political independence, territorial integrity of states and self-determination of people.
  • Legally, Wagner is not a Russia-based private military company though it works closely with the Russian security apparatus. Private mercenary groups are illegal in Russia and Inside Russia
For Prelims: Wagner group, Sudan Capital Khartoum, Russia-Ukraine war, Rapid Support Forces (RSP), Sudan, Mali, the Central African Republic, Mozambique, and Libya in Africa.
For Mains: 1. What is the Wagner Group? Discuss How active is the Wagner Group in Africa? What is the goal of the Wagner Group in Africa?(250 Words)
Source: The Hindu

RELATIVE HUMIDITY

1. Context

Deficient rain, relatively high humidity in the air, and rising temperature made it a triple whammy of sorts for the people in the different parts of the country, with the heat index (also known as ‘real feel’ temperature) crossing the 50° Celsius mark in many places. 

2.  About Humidity

  • Relative humidity is a simple concept as far as weather phenomena go, but it has significant, far-reaching consequences for how we must take care of ourselves on a hot or wet day.
  • Humidity is the amount of moisture in the air around us and there are three ways to track it.
  • The most common of them is absolute humidity the mass of water vapour in a given volume of air and water vapour mixture, expressed as kg/m3.
  • The second is specific humidity, equal to the mass of the moisture divided by the mass of air.
  • It is expressed as a dimensionless number (but Sometimes as grams per kilogram among other similar units).
  • The third way is relative humidity: it is important because it factors in the amount of vapour that air can hold at different temperatures.
  • Determining its value is a bit more complicated it is the vapour density of the air divided by the saturation vapour density at dry bulb temperature.

2. Reasons for Relative humidity matters

  • On a hot day, our body uses sweat to cool itself. Sweat is released via our skin to the surface.
  • There, the liquid evaporates. When water changes phase from liquid to vapour, it absorbs heat from the surface on which it lies. So when sweat evaporates, it absorbs heat from the skin, cooling it.
  • The higher the relative humidity of the air, the more it is filled with moisture.
  • When air already contains a lot of moisture, it won't easily accept more. This means that the sweat on your skin can't evaporate.
  • At the same time, the body keeps sweating as it is still expecting to cool itself.
  • As a result, if the relative humidity is high, you can sweat on a hot day even when you are sitting still while your body keeps accumulating heat. This can quickly become dangerous.
  • Relative humidity of 30-60 per cent is generally considered to be comfortable.
  • Environments that have lower levels than this typically use humidifiers to increase the humidity.
  • When the level is higher, a fan will help move the air around you and help sweat evaporate better. In both cases, drinking water is important. 

3. The implication of relative humidity

  • Warmer air can hold more moisture than cooler air. So at the same absolute humidity, the relative humidity of warmer air will be lower than that of cooler air.
  • It is like saying two vessels can hold the same amount of water just that the bigger vessel will be less full than the smaller vessel.
  • This is why, for example, Chennai had an absolute humidity of 70 per cent at 2.30 pm on April 23, its relative humidity was lower, around 60 per cent because it had an ambient temperature of 32°C.
  • The change in the capacity for moisture as the air warms are also nonlinear, meaning it does not increase by the same amount as the air warms.
  • For example, the difference as it warms over 20°C from 20°C to 0°C is small, but there is an enormous improvement in its vapour carrying capacity as it warms over 20°C from 30°C to 50°C

4. Measuring of Relative humidity

  • There are a few ways to measure relative humidity. One is to conduct a simple experiment with household items, another is to use maths and the third is to use an app or device.
  • For the experiment, you need two mercury thermometers, some cotton, rubber bands and access to cold water.
  • First, make sure both thermometers show the same reading, say, under a fan.
  • Next, soak some cotton in cold water and wrap it around the bulb of one of the thermometers with a rubber band.
  • Hold this thermometer under the fan, such that water from the cotton evaporates and record the thermometer reading after five minutes.
  • Hold up the other thermometer in the air and record its reading after five minutes. You will thus have the wet bulb and dry bulb temperatures, respectively.
  • Next, subtract the wet-bulb temperature from the dry-bulb temperature to get the temperature difference.
  • Finally, use the relative humidity chart to get the relative humidity value. For example, if the temperature was 6°C and the dry-bulb temperature was 28°C, the relative humidity would have been 59 per cent.
Image Source: The Hindu
  • A psychrometer is a device that has two such thermometers plus a chart to get the final reading.
  • Modern, electronic psychrometers can calculate the relative humidity directly.
  • For a rough sense, the lower the wet bulb temperature, the drier the air is and the less relatively humid it is.
  • For the mathematical method, there are two ways (among others) to estimate the relative humidity, one simpler and one a bit more involved.
  • The first way is to divide the actual vapour pressure (e) by the saturated vapour pressure (es).
  • The vapour pressure is the amount of moisture that air contains. The saturated value is the maximum possible amount.
The given formula requires the dew point (Td), which you can obtain from a weather website.
RH = (e/es)* 100 
e= 6.11× 10 ((7.5 × Td)/(237.3 + Td))
 
  • For es, use the same formula but replace Td with T, the actual temperature.
  • The second way is to calculate relative humidity starting from the specific humidity, pressure and temperature, using the Clausius Clayeyron equation.
  • If you prefer software, search for "hygrometer" in your phone's app store to locate some options. (A hygrometer is an instrument that measures humidity).
  • Note that the app will only work if your phone has a sensor that can sense humidity.
  • If you like hardware, psychrometers and devices called hygrometers are available in physical as well as online stores.

5. Wet bulb temperature

  • A more direct way to understand the implications of relative humidity for your well-being is in the form of the wet bulb temperature (also known as the adiabatic saturation temperature).
  • It is the lowest temperature a surface like your skin can reach when water evaporates from it.
  • The wet bulb temperature is equal to the dry bulb temperature when the relative humidity is 100 per cent.
  • A wet bulb temperature in an environment of 32- 35°C or higher can be quickly lethal, even if you are not doing any physical activity or are in the shade. (At least one study has shown that even a wet bulb temperature of more than 29°C can be dangerous).
  • The climate crisis is rendering heatwaves more common, more frequent, more spread out and more potent over the Indian subcontinent.
  • As a study published in May 2022 Says, "Whether today's most impactful heatwaves could have occurred in a preindustrial climate, traditionally a central focus of attribution research, is fast becoming an obsolete question.
  • The next frontier for attribution science is to inform adaptation decision-making in the face of unprecedented future heat.
  • One way to adapt is to keep an eye on the relative humidity, drink lots of water and cool yourself.
For Prelims: Relative humidity, Absolute humidity, Specific humidity, hygrometer, psychrometer, 
For Mains:
1. Discuss the different types of humidities. Explain the implications of the relative humidity. (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements with regard to atmospheric humidity: (UPSC ESE 2018)
1. Absolute humidity is the amount of water vapour per unit volume.
2. Hygrometer is used to measure relative humidity.
3. Dew point is the temperature at which the relative humidity is 75%.
Which of the above statements are correct?
A. 1 and 2 only      B. 1 and 3 only     C. 2 and 3 only      D. 1, 2 and 3
 
Answer: A
 
2. Relative humidity is  (ISRO Scientist Civil 2020)
1. Something concerned with air conditioning
2. The ratio of moisture present in air to the capability of air to hold maximum moisture
3. The ratio of actual humidity to absolute humidity
4. Representative of amount of moisture held in air
 
Answer: 2
 
Source: The Hindu

RUSSIA AND UKRAINE DEAL

 

1. Context

Russia and Ukraine signed separate agreements Friday with Turkey and the U.N., clearing the way for exporting millions of tons of desperately needed Ukrainian grain as well as Russian grain and fertilizer ending a wartime standoff that had threatened food security around the globe.

2. What is the grain export deal?

  • The deal makes provisions for the safe passage of ships.
  • It foresees the establishment of a control center in Istanbul, to be staffed by U.N., Turkish, Russian, and Ukrainian officials, to run and coordinate the process.
  • Ships would undergo inspections to ensure they are not carrying weapons.
  • Ukraine was expected to export 22 million tons of grain and other agricultural products that have been stuck in Black Sea ports due to the war.
  • Guterres first raised the critical need to get Ukraine’s agricultural production and Russia’s grain and fertilizer back into world markets in late April during meetings with Russian President Vladimir Putin in Moscow and Ukrainian President Volodymyr Zelenskyy in Kyiv.
  • He proposed a package deal in early June amid fears that the war was endangering food supplies for many developing nations and could worsen hunger for up to 181 million people.
  • Russian and Ukrainian officials have blamed each other for the blocked grain shipments.

3. Why was the grain export deal signed?

  • Ukraine is one of the world’s largest exporters of wheat, corn, and sunflower oil, but Russia’s invasion of the country and naval blockade of its ports have halted shipments.
  • Some grain is being transported through Europe by rail, road, and river, but the prices of vital commodities like wheat and barley have soared during the nearly five-month war.
  • Ukrainian and Russian military delegations reached a tentative agreement last week on a U.N. plan that would also allow Russia to export its grain and fertilizers.
  • Mykhailo Podolyak, an adviser to Ukraine’s president, stressed Friday that Ukraine and Russia would sign separate agreements.

4. Ukraine in Global Food Supply

Image Source: BBC

5. Why was the movement of grains halted till now?

  • Moscow accused Ukraine of failing to remove sea mines at the ports to allow safe shipping and insisted on its right to check incoming ships for weapons.
  • Ukraine has argued that Russia’s port blockade and launching of missiles from the Black Sea made any shipments unviable.
  • Ukraine has sought international guarantees that the Kremlin wouldn’t use the safe corridors to attack the Black Sea port of Odesa.
  • Ukrainian authorities have also accused Russia of stealing grain from eastern Ukraine and deliberately shelling Ukrainian fields to set them on fire.
For Prelims: U.N(United Nations), Turkey, Russia, and Ukraine, Black sea port of Odesa, Food Security.
Mains: 1. What is the great Export deal between Russia and Ukraine? Discuss why it has been signed between Russia and Ukraine. (250 Words).
Source: The Indian Express

PONZI SCHEME

1. Context

The government is working to clamp down on financial apps that are taking investors for a ride, with false promises of lucrative returns, finance minister Nirmala Sitharaman said on Sunday, adding that there was, however, no plan as yet to bring financial influencers under a separate regulatory framework.

2. About Ponzi Scheme

  • It is a fraudulent investing scam promising high rates of return with little risk to investors.
  • A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors.
  • This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers.
  • Both Ponzi schemes and Pyramid schemes eventually bottom out when the flood of new investors dries up and there is not enough money to go around.
  • At that point, the schemes unravel.

2. Key points

  • The Ponzi scheme generates returns for older investors by acquiring new investors, who are promised a large profit at little to no risk.
  • The fraudulent investment scheme is premised on using new investors' funds to pay the earlier backers.
  • Companies that engage in a Ponzi scheme focus their energy on attracting new clients to make investments, otherwise, their scheme will become illiquid.
  • The SEC has issued guidance on what to look for in potential Ponzi schemes including guarantee of returns or unregistered investment vehicles with the SEC.
  • The largest Ponzi scheme was carried out by Bernie Madoff, conning thousands of investors out of billions of dollars.

3. Understanding Ponzi Schemes

  • A Ponzi scheme is an investment fraud in which clients are promised a large profit at little to no risk.
  • Companies that engage in a Ponzi scheme focus all of their energy on attracting new clients to make investments.
  • This new income is used to pay original investors their returns, marked as a profit from a legitimate transaction.
  • Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors. when this flow runs out, the scheme falls apart.

4. Origins of the Ponzi Scheme

  • The term "Ponzi Scheme" was coined after a swindler named Charles Ponzi in 1920.
  • However, the first recorded instances of this sort of investment scam can be traced back to the mid-to-late 1800s and were orchestrated by Adele Spitzeder in Germany and Sarah Howe in the United States.

5. Ponzi Scheme Red Flags

Regardless of the technology used in the Ponzi Scheme, most share similar characteristics. The Securities and Exchange Commission has identified the following traits to watch for:

1. A guaranteed promise of high returns with little risk 
2. A consistent flow of returns regardless of market conditions
3. Investments that have not been registered with the Securities and Exchange Commission (SEC)
4. Investment strategies that are secret or described as too complex to explain 
5. Clients are not allowed to view official paperwork for their investment
6. Client facing difficulties removing their money 
 
For Prelims: Ponzi Scheme, Pyramid Scheme
 
 
Previous Year Questions
 
1. Ponzi Scheme refers to ____ Scam. (NTPC 2016)
1. coal allocation
2. investment
3. fodder
4. food grain
 
Answer: 2
 
Source: Investopedia
 

PSLV

 

1. Context

Recently ISRO’s Polar Satellite Launch Vehicle (PSLV) successfully placed two Singapore satellites into their intended orbits.

2. History of PSLV

  • The PSLV is one of ISRO’s most reliable vehicles, having launched hundreds of satellites with only three failures or partial failures since 1993.
  • Over the years, various improvements have been made to it, making it a stand-out satellite carrier.
    Launch vehicles are meant only to deposit satellites into space, after which they become useless.
  • They either burn up in space or add to the ever-increasing concern of space debris. The PSLV, however, is now technologically advanced enough to have one component that can stay on in space to research after it has delivered its satellite.
  • The current mission includes this component, POEM-2, which stands for PSLV Orbital Experimental Module. 

3. What is PSLV (Polar Satellite Launch Vehicle)?

  • PSLV is the most reliable rocket used by ISRO to date. Its first launch was in 1994, and it has been ISRO’s main rocket ever since.
  • Apart from Indian satellites, it also carries satellites from other nations into space, like in the current mission, where it carried payloads from Singapore.
  • The reason for this is that apart from being reliable, the PSLV is also more affordable than the launch vehicles of many other countries.
  • After its first successful launch in October 1994, PSLV emerged as a reliable and versatile workhorse launch vehicle in India.
  • The vehicle has launched numerous Indian and foreign customer satellites.
  • Besides, the vehicle successfully launched two spacecraft, Chandrayaan-1 in 2008 and Mars Orbiter Spacecraft in 2013, that later traveled to Moon and Mars respectively.
  • Chandrayaan-1 and MOM were feathers in the hat of PSLV. PSLV earned its title ‘the workhorse of ISRO by consistently delivering various satellites into low earth orbits. 

4. Various Components of PSLV

  • Rockets have several detachable energy-providing parts. They burn different kinds of fuels to power the rocket.
  • Once their fuel is exhausted, they detach from the rocket and fall off, often burning off in the atmosphere due to air friction, and getting destroyed.
  • Only a small part of the original rocket goes to the intended destination of the satellite.
  • Once the satellite is finally ejected, this last part of the rocket either becomes part of space debris or once again burns off after falling into the atmosphere.
  • PSLV has four parts namely PS1, a solid rocket motor augmented by 6 solid strap-on boosters; PS2, a storable liquid rocket engine, known as the Vikas engine; PS3, a solid rocket motor that provides the upper stages high thrust after the atmospheric phase of the launch; and PS4, the uppermost stage consisting of two Earth storable liquid engines.
  • As technology evolves, the effort is to make the various parts of a rocket reusable. PSLV’s PS4 has been able to achieve this. 

5. PSLV's Most recent Missions

  • The rocket launched recently carried TeLEOS-2 as the primary satellite and Lumelite-4 as a co-passenger satellite.
  • While TeLEOS-2 will “be used to support the satellite imagery requirements of various agencies within the Government of Singapore”, Lumelite-4 “aims to augment Singapore’s navigation maritime safety and benefit the global shipping community.
  • POEM-2, meanwhile, will be utilized as an orbital platform to carry out scientific experiments through non-separating payloads.
  • The payloads belong to ISRO/Department of Space, Bellatrix, Dhruva Space, and the Indian Institute of Astrophysics.

6. Why do satellites need launch Vehicles?

  • The Launch vehicle rockets have powerful propulsion systems that generate the huge amount of energy required to lift heavy objects like satellites into space, overcoming the gravitational pull of the earth.
  • Satellites, or payloads as they are often called, sit inside the rocket and are ejected once they reach their intended orbit in space.
  • Most satellites have small propulsion systems and carry small amounts of fuel, because they encounter very little drag, or force, in outer space.
  • What they do carry are the instruments needed for the scientific work for which they are being sent into space. 
For Prelims: Polar Satellite Launch Vehicle (PSLV), International Space Research Organisation (ISRO), PSLV Orbital Experimental Module, POEM-2, Chandrayaan-1, TeLEOS-2, Lumelite-4 and Indian Institute of Astrophysics.
For Mains: 1. ISRO’s role has been impeccable in making India a global space power, however, there are many challenges and opportunities in the new space age that ISRO needs to address. Discuss. (250 words).

Previous year Question

1. With reference to India's satellite launch vehicles, consider the following statements: (UPSC 2018)
1. PSLVs launch satellites useful for Earth resources monitoring whereas GSLVs are designed mainly to launch communication satellites.
2. Satellites launched by PSLV appear to remain permanently fixed in the same position in the sky, as viewed from a particular location on Earth.
3. GSLV Mk III is a four-stage launch vehicle with the first and third stages using solid rocket motors, and the second and fourth stages using liquid rocket engines.
Which of the statements given above is/are correct?
A. 1 only
B. 2 and 3
C. 1 and 2
D. 3 only
Answer: A
 
Source: The Indian Express

OFFSETS

1. Context

Offsets have come under fire as a way for companies to compensate for carbon emissions through eco projects elsewhere.
Swedish fast-food Chain Max seems not only does the company claim to have net-zero emissions, but it also brands its beef and non-meat burgers as climate positive.

2. Key points

  • Max claims to offset 110 per cent of its carbon emission an annual total of 1, 47, 000 tons in 2020 mainly by donating a fraction of the profits to plant trees in Uganda.
  • This sounds ideal. But research recently published in the Environmental Science and Policy journal has challenged this "net zero" logic.
  • By buying "offsets", the chain does not need to reduce actual carbon emissions to fulfil its net-zero claim.
  • Max's absolute emissions have more than tripled between 2007 and 2021 due to the opening of more restaurants and subsequent higher power usage. And the company admits it expects its carbon impact to keep on growing.

3. Working on offsets

  • Buying offsets is a way to compensate for environmental damage. Companies make a financial contribution to projects that reduce the amount of carbon dioxide in the atmosphere and exchange can keep polluting themselves.
  • Examples of projects include planting trees and rewetting peatlands which store huge amounts of carbon in their soil.
  • By this logic, it is possible to take carbon-neutral flights with the German airline Lufthansa. 
  • Even the FIFA World Cup in Qatar billed itself as climate-neutral.
  • In recent years, the carbon offset industry has boomed. It is worth $2 billion annually and is expected to grow five times that size by the end of the decade.
  • After the concept's invention in 1987, some international treaties such as the Kyoto Protocol one ton of carbon, to keep within emissions limits.
  • That market where carbon credits are traded to meet government regulations is much bigger about $ 261 billion a year.
  • However, experts have warned most of the credits on the voluntary carbon market are not effective.

4. Problems with offsetting

  • A recent analysis by the British news outlet The Guardian, German newspaper Die Zeit and the investigative site SourceMaterial found more than 90 per cent of rainforest carbon offsets by  Verra, the world's biggest certifier, are likely to be "phantom credits", meaning they do not represent genuine carbon reductions.
  • The corporate claims of being climate positive cannot solely rely on offsets.
  • There is not enough room on the planet to absorb all the carbon emissions through trees.
  • So while this might look good for one company it's not a practical strategy globally.
  • The environmental, social and governance practices, one in five ESG risks are linked to carbon offsets and misleading communications rising to one in three for the food and beverage sector.
  • If a company claims to be carbon neutral consumers would think the company does not harm the environment, but the reality is that changing your business model is costly and time-consuming.
  • The cost of credits starting from $4.24 a ton is often much less than the projected cost of reducing corporations' emissions in the first place.
  • The lack of regulation means standards in the market are still hugely erratic.

5. Offsetting in practice<


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