CARBON TRADING

Presented byArjun MAsma Ali KhanAtul SNinu Elizabeth PaulsonNishal K M

KYOTO PROTOCOL•The KYOTO protocol is an international

agreement linked to the United Nations Framework Convention on Climate Change(UNFCCC), Which commits its members by setting internationally binding emission reduction targets.

•KYOTO protocol was adopted in Kyoto, Japan in 1997 and came into effect on 16th Feb 2005.

•KYOTO protocol mainly deals with emission of green house gases that leads to global warming.

CARBON TRADING• Carbon trading is a form of emission trading that

specifically targets carbon dioxide. • This is a common form of trading which countries

utilize in order to adhere to the Kyoto protocol.• This is mainly focused towards reduction of carbon

emission in order to reduce future climate changes.

• Under carbon trading a country having more emission of carbon is able to purchase the right to emit more and the country having less emission trades this “right to emit” to other countries.

Carbon trading implementation mechanismEmission trading(ET)• Countries having emissions less than their assigned

amount can sell their excess amount to those countries who have exceeded their assigned amount

• The assigned amounts can be defined as a trading allowances or commodity and this free market is known as “ CARBON MARKET”

Clean development mechanism (CDM)• Developed countries can fund emission reduction projects

in developing nations that did not sign the Kyoto protocol• In exchange, the developed nations earn legally recognized

emission credits CER(Certified Emission Reduction) to offset their emission obligations

Carbon trading implementation mechanismJoint implementation (JI)•Developed countries can implement

emission reduction projects in other developed or developing countries and earn Emission Reduction Units (ERU)

•ERU can be used to meet the carbon allowances or can be sold in the market

Advantages of carbon trading

•Reduction in green house gases•Source of revenue for developing

countries•Supports free market system•Encourages alternative sources of energy

or green technology

Disadvantages of carbon trading

•Right to pollute: Industries in developed countries are purchasing legal rights to pollute more

•Slow process: industries are opting the easy way out ; purchase more allowances than opting greener technology

•No effective carbon reduction in the atmosphere

•Lack of centralized system or global framework

India’s stance on carbon trade

•India pocketed Rs 1500 crores in the year 2005 by just selling carbon credits to developed countries

•India has generated 30 million carbon credits & 140 are in pipeline

Some of the leading companies of India using and selling carbon credits