CARBON CREDITS:

AN EFFECTIVE WAY OF CURBING POLLUTION

By Sarita Gurnule

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Introduction:

Carbon credits are an element used to aid in regulation of the amount of gases that are being released into the air.

This is part of a larger international plan which has been created in an effort to reduce global warming and its effects.

The plan works by capping the amount of total emissions that can be released by one company or business.

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There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. There are two types of market in carbon credit:

Compliance Market (Annexure I countries)

Voluntary Market (Non- Annexure countries)

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Burning of fossil fuels is a major source of industrial greenhouse gas emissions. The major greenhouse gases emitted by these industries are carbon dioxide, methane, nitrous oxide, hydro fluorocarbons (HFCs), etc., The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions.

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KYOTO PROTOCOL

It was adopted in Kyoto, Japan, on 11th December 1997 Objective:

Stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent air pollution interference with the climate system Kyoto Protocol is an agreement made under United Nations Framework Convention on Climate Change (UNFCCC).

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The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment to invest in emission reducing projects in developing countries

Carbon credits are certificates issued to countries that reduce their emission of GHG which causes global warming.
Carbon credits are measured in units of Certified Emission Reductions (CERs).

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OUTLOOK FOR INDIA

India is one of the exempted from this protocol as they are stated as developing countries, but overseas companies can buy carbon credits from these countries.

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INDIAN COMPANIES: TAKING ADVANTAGE Gujarat Fluoro Chemicals Tata Steel NTPC

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Emission allowances:

Under the Kyoto Protocol, the 'caps' or quotas for Greenhouse gases for the developed Annex I countries are known as Assigned Amounts The quantity of the initial assigned amount is denominated in individual units, called Assigned amount units (AAUs)

Under Joint Implementation (JI) Under the Clean Development Mechanism (CDM) Under International Emissions Trading (IET)

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Emission markets:

The Chicago Climate Exchange, European Climate Exchange, NASDAQ OMX Commodities Europe, Power Next, Commodity Exchange Bratislava and the European Energy Exchange.

How buying carbon credits can reduce emissions

Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air.

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Conclusion:

There is a great opportunity awaiting for India in carbon trading.

Of the 391 projects sanctioned, the UNFCCC has registered114 from India, the highest for any country. In the new regime, the country could emerge as one of the largest beneficiaries accounting for 25 % of the total world carbon trade, says a recent World Bank report

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HITAVADA Article; Dated: 22nd Feb 2012

BSE GREENEX Launched

BSE launch new index called BSE-GREENEX, measuring the performance of companies in terms of carbon emissions. The index model developed by BSE in collaboration with premier B-school IIM-A, will enable investors take more informed investment decision about companies in the energyintensive sectors, amongst others

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