Question

Regarding “carbon credits”, which of the following statements is not correct?

• A. The carbon credits system was ratified in conjunction with the Kyoto Protocol
• B. Carbon credits are awarded to those countries or groups who have reduced the green house gases below their emission quota
• C. The goal of the carbon credit system is to reduce carbon dioxide emission
• D. Carbon credits are traded at a price fixed from time to time by the United Environment Programme

Hint:

Ask whether carbon credit prices are set by a market or fixed by an authority.

Answer 1

The Correct Option is D

This question asks us to find the one false statement, so we check each option against how the carbon credit market actually works.

1. Ratified with Kyoto Protocol: True. The 1997 Kyoto Protocol set up the framework that turned emission cuts into tradeable credits.
2. Awarded for cutting emissions below quota: True. Countries or firms that pollute less than their cap can sell the unused allowance as credits.
3. Goal is to reduce carbon dioxide emission: True. Putting a price on emissions is meant to push polluters toward cleaner processes.
4. Price fixed by the United Nations Environment Programme: False. Carbon credits trade on open carbon markets and exchanges, so prices move with demand and supply, not by a UN body setting a rate.

Only the last statement fails the check.

So the correct answer is option D.