CARBON CREDIT

TRADING

Shweta Gupta
SWM (IV Sem)
Roll No. 15
Outline of presentation
 Carbon Emissions
 Carbon Emission Trading

 Kyoto Protocol And Its Mechanism

 Carbon Credit and its Source

 Trading Unit In Carbon Market

 Sources Of Demand And Supply

 Trading Assets And Liabilities

 Traded On And Role Of MCX

 India As A Potential Supplier

 Benefits Of Carbon Trading

 Refrences
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CARBON EMISSION TRADING

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 Carbon emissions trading is
emissions trading specifically for
carbon dioxide (calculated in tonnes of
carbon dioxide equivalent or tCO2e) and
currently makes up the bulk of emissions
trading.

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KYOTO PROTOCOL

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 Global agreement that offers the best
opportunity to set our world on a course toward
long-term reduced carbon emissions.
 Adopted by over 184 countries.
 Every industrialized country except the US.
 Focuses initially on the 35 countries most
responsible for the carbon build-up over the last
half century.
 Reduce their carbon emissions by a combined
5.2 percent below 1990 levels by 2012.
 Several flexible mechanisms.
 Took effect as an international treaty in February
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KYOTO MECHANISM

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 The Kyoto mechanisms are:
 Emissions Trading

 The Clean Development Mechanism (CDM)

 Joint Implementation (JI)

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PURPOSE OF KYOTO PROTOCOL

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 Stimulate sustainable development through
technology transfer and investment.
  Help countries with Kyoto commitments to
meet their targets by reducing emissions or
removing carbon from the atmosphere in
other countries in a cost-effective way.
 Encourage the private sector and developing
countries to contribute to emission reduction
efforts.

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CARBON CREDIT AND ITS SOURCES

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 One carbon credit is equivalent to one tonne
of carbon dioxide or its equivalent
greenhouse gas (GHG).
 They provide a way to reduce greenhouse
gas emissions by giving them a monetary
value. A credit gives the owner the right to
emit one tonne of carbon dioxide.
 Clean Development Mechanism (CDM)
projects.
 Potential Buyers – Corporate / Investors –
Annexure I countries.
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CARBON CREDIT

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TRADING UNIT IN CARBON MARKET

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 Assigned Amount Unit (AAU): Assigned units
 Removal Unit (RMU): Land use activities
 Emission Reduction Unit (ERU): Joint
implementation
 Certified Emission Reduction(CER): Clean
development mechanism

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SOURCES OF DEMAND & SUPPLY

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 Enormous opportunity
 Upcoming manufacturing/public utility projects
 Employ a range of energy saving devices
 Reduce GHG emissions
 Earn carbon credits to be sold at a price
 Generated by
 Project participants
 Implementation of CDM in Non-Annexure I countries
 Joint Implementation (JI) in Annexure I countries

 Buyers mainly from Annexure I countries

 European nations
 Other markets include Japan, Canada, New Zealand, etc.

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TRADING – ASSETS AND LIABILITIES

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 Assets: If a carbon emitting business can
under-use its initial allowance by achieving
improvements in energy efficiency, it can sell
its surplus on the market.
 Liabilities: However, if a business is faced by
high costs to reduce its emissions, it must
instead buy extra allowances
 The new carbon market should develop a
price that reflects the cheapest ways of
implementing emission cutbacks.
 As the market price of carbon emissions rises,
so there is an incentive for businesses to
invest in technologies that are more pollution 18
efficient.
TRADED ON

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 The European Climate Exchange (ECX), a
subsidiary of Chicago Climate Exchange
(CCX), remains the leading exchange trading
in European environmental instruments that
are listed on the Intercontinental Exchange
(ICE), previously known as International
Petroleum Exchange (IPE).

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THE ROLE OF MCX

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 MCX entered into a strategic alliance with
CCX in September 2005 .
 Immense scope and opportunity for domestic
suppliers.
 Integrate the Indian market with its global
counterparts.
 Foster world-class best practices.

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INDIA AS A POTENTIAL SUPPLIER

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 One of the leading generators of CERs through
CDM.
 Forecast trading in carbon credits would touch
US$ 100 billion by 2010.
 Total registered CDM projects are more than 1400.
 Almost 1/3rd of the total CDM projects registered
with the UNFCCC from India.
 The total issued CERs with India as a host country
till now stand at 54,119,841 (around 54 million),
again around 1/3rd of the total CERs issued by the
UNFCCC.
 In Feb 2009, a total of 392 CDM projects were 21
registered with the UNFCCC.
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EXAMPLES FROM INDIA
 An Indian Village named Powergudda Sold 147 tonnes

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of Carbon to the World Bank.
 Mahalaxmi Construction Corporation Ltd,Pune, and its
sister company RDS Construction Ltd, Kolhapur, will
sell 18,000 carbon credits to UK for the next 12 Years.
 Gujarat fluorocarbons generates 4.6 million carbon
credits annually that would be sold to Netherland and
Japanese firm.
 The Delhi Metro is the first railway project in the world
to earn carbon credits. It is equipped with a
regenerative braking system which enable it to use
less grid electrical energy, thereby making a reduction
of (tones of Co2) of 4,11,600.

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VARIOUS INDUSTRIES HAVING SCOPE
OF GENERATION OF CERS

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 Agriculture
 Energy ( renewable & non-renewable
sources)
 Manufacturing

 Fugitive emissions from fuels (solid, oil and

gas)
 Metal production

 Mining and mineral production

 Chemicals

 Afforestation & reforestation

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BENEFITS OF CARBON TRADING

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 Created new businesses – e.g. carbon traders,
carbon management specialists, auditors and
verifiers.
 New financial products such as carbon funds
entered the market.
 Reward efficiency – e.g. those businesses
that are pollution efficient – hopefully industry
will produce better products in a better way.
 Reward action – e.g. capital investment in
cleaner factories and production processes
which use less carbon-intensive energy
sources.
 Reduce pollution without damaging the
competitiveness of European businesses. 25
REFERENCES

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 www.cseindia.org/programme/geg/cdm_faq.htm
 www.chicagoclimateexchange.com

 www.envfor.nic.in/cc/cdm/criteria.htm

 http://www.cdm.unfccc.int/Issuance

 www.europeanclimateexchange.com

 http://www.climatechangefutures.org/pdf/CCF
_Report_Final_10.27.pdf
 http://www.mcx.com

 http://www.pointcarbon.com/

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THANK YOU !!!