carbon+trading

8/3/2019 Carbon+Trading

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CARBON TRADINGSUBMITTED BY

ANITHA M RAYSHARYA S


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ORIGIN

The carbon trade is an idea that came about in response to theKyoto Protocol.

The Kyoto Protocol is an agreement under which industrializedcountries(Annex I) will reduce their greenhouse gas emissionsbetween the years 2008 to 2012 to levels that are 5.2% lowerthan those of 1990.

All the Annex I and non Annex I countries nominated a designatednational authority to manage its emissions


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Carbon trading is the buying and selling of environmental

services, including the removal of greenhouse gases fromthe atmosphere, which are identified and purchased byeco-consulting firms and then sold to individual orcorporate clients to offset their polluting emissions.

DEFINITION


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IMPORTANCE OF CARBON TRADING

Carbon is the common denominator in all-polluting gases that causeglobal warming.

Carbon dioxide is the gas most commonly thought of as agreenhouse gas and it is responsible for about half of theatmospheric heat retained by trace gases.

The levels of CO2 in the atmosphere has increased from 260 parts

per million to around 375ppm over the last 300 years, most of theincrease has taken place at an accelerating pace over the last 100years which results in an annual account of 20% increase in CO2 inthe atmosphere.


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IMPORTANCE OF CARBON TRADING


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A global effort will beneeded to reducegreenhouse gasemissions and to arrestclimate change. TheIntergovernmental Panel

on Climate Change(IPCC) have predictedthat unless emissions ofgreenhouse gasesdecrease there will be a

temperature increase ofbetween 1.4oC and 5.8oCby 2100.

IMPORTANCE OF CARBO

N TRADING


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WHAT IS EMISSIONS TRADING?

Company A canreduce 1000 tonsCO2E at $2/ton =$2000

Company B canreduce 1000 tonsCO2E at $6/ton =$6000

Company A - Seller Company B - Buyer

1000 tons CO2E at$4/ton = $4000

SELL BUY

$2000 Profit $2000Savings
https://www.arttoday.com/PD-0031886/Main/signup/index?PRODUCT=AT_3D_TRIhttps://www.arttoday.com/PD-0031886/Main/signup/index?PRODUCT=AT_3D_TRIhttps://www.arttoday.com/PD-0031886/Main/signup/index?PRODUCT=AT_3D_TRIhttps://www.arttoday.com/PD-0031886/Main/signup/index?PRODUCT=AT_3D_TRI


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WHAT IS EMISSIONS TRADING?

A CER or carbon Credit is defined as the unit related to reduction of

1 tonne of CO2 emission


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CARBON PERMIT, CREDIT & OFFSET

Carbon credits and offsets are the same thing, both being

equal to one metric ton of GHG emissions. Carbon permit means that its holder has the right to pollute up

to a certain level.

A carbon credit or offset is a certificate stating that someoneelse has made a commitment to reduce carbon emissions on

behalf of the owner of the credit or offset.

People, governments, and businesses can buy, sell and tradecarbon credits, offsets, and permits in the various carbonmarkets.


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HOW KYOTO PROTOCOL FACILITATES CARBON TRADING

Each industrialised country:

sets a 'cap' on emissions

creates 'permits' equal to its 'cap'

requires organisations to meet their'target' within the 'cap'

Credits arise fromemission reduction projects:

in industrialised countries

(often expensive) in developing countries

(often inexpensive)

Polluting organisations meet

the terms by: using 'allowances'

reducing their emissions,and selling excess permits

buying permitsfrom the government

buying permits from someoneelse

buying credits


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EXPECTED EMISSION REDUCTION 2012 AS KYOTO PROTOCOL


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INDIAN SCENARIO

Developing nations like India tend to gain immensely from

carbon trading Small scale industries develop and implement new eco-friendly

technologies that are highly energy efficient by mass employinglabour workforce

India can gain by selling their credits to developed countries that

persistently need them to make both sides of the Carbon ledgermatch

Small scale industries are the biggest beneficiaries of thissystem as they have the luxury of using the cheapest and mostenergy efficient means i.e. raw labour

Using manual labour tremendously reduces the output ofpollutant gases besides helping reduce unemployment.


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PERSONAL CARBON TRADING

an innovative, radical policy approach to climate mitigation in

which emission rights are allocated to individuals. for each purchase of carbon-based energy, allowances would be

deducted from the individual's carbon budget i.e., every timepeople pay an energy bill, buy petrol, or book a flight they willalso have to surrender carbon units.

If people emitted more carbon than their allowance, they wouldneed to buy additional carbon credits.

those who emitted less carbon than their allowance could sellthe excess into the personal carbon market.

The personal allowance would be reduced periodically in line

with national emissions targets. Delivering emission reductions by altering millions of individuals'

energy-use choices and behavior remains an unmet policychallenge.


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ADVANTAGES

Emitters are given flexibility

and control Firms choose to emit/reduce

Rewards innovation andinvestment in new technology

an incentive to go beyondminimum requirements

Common price signal ensuresthat reductions take placewhere they are least costly

achieves environmentalgoals at least cost

The overall cap on emissionsensures environmentalobjective is achieved

DISADVANTAGES

Still requires monitoring,

reporting, verification andcompliance infrastructure - liketraditional regulation

May result in increased localconcentrations of emissions

Price is uncertain determinedby market Relies on a price signal some

markets may be less efficient Allocation of target/allowances is

highly arguable


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Some NGOs and green businesses favor the carbon trade and view

it as a win-win solution that ensures environmental protection witheconomic prosperity, whereas other environmentalists and grassrootsorganizations claim that it is no solution to environmental problemssuch as global warming.

It's hard to know whether the economy generated from this actually

makes any real difference in reducing carbon emissions.

Carbon trading is just a clever way for polluters to buy their way outof environmental responsibility. With enough cash, they can legallykeep on polluting the skies and driving us ever closer to CO2 tipping

points. Within trading schemes such as the ETS( European Trading

Scheme), whole sectors' emissions are excluded, such as transport,homes and the public sector.

CARBON TRADE: A BOON OR CURSE ?


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CARBON TRADE: A BOON OR CURSE ?

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