carbon trading

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CARBON TRADING PRESENTED BY- Satendra rajput PDGM SERVICES

What is carbon trading? : 

What is carbon trading? Carbon trading is an administrative approach used to control pollution by providing incentives for achieving reductions in emissions of pollutants. Also known as emission trading. Overall goal of an emissions trading plan is to minimize the cost of meeting a set emissions target.

Kyoto Protocol : 

The protocol was initially adopted on 11 December 1997 in Kyoto, Japan and entered into force on 16 February. A protocol to the United nations framework convention on climate change (UNFCCC) aimed at fighting global warming. UNFCCC is an international environmental treaty with the goal of achieving “stabilization of greenhouse gas concentrations” in the atmosphere. As on November 2009,187 countries have signed and ratified the protocol. Kyoto Protocol

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Continued…… Under the protocol 37 countries ( called ‘Annex I countries”) commit themselves to reduction of four greenhouse gases (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride) and two groups of gases (hydrofluorocarbons, perfluorocarbons). US is the only nation which has not ratified it as they believe that 5% reduction will “wreck the American economy”. The target agreed upon was an average reduction of 5.2% from 1990 levels by the year 2012. Kyoto Protocol provides ‘Cap and Trade’ system.

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Participation of countries in kyoto protocol: Green indicates those countries who have signed and ratified. Grey indicates those who have not yet decided. Red indicates those who have no intention to ratify it.

CAP AND TRADE: : 

CAP AND TRADE: Cap-a set limit on the amount of a pollutant that can be emitted. Trade-The transfer of allowances is referred to as trade. Under this the companies are issued emission permits and are required to hold an equivalent number of allowances (credits) which represent the right to emit a specific amount. Companies that need to increase emission allowance must buy credits from those who pollute less.

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In effect, buyer is paying a charge for polluting, while seller is being rewarded for having reduced emissions by more that was needed. Carbon credits are measured in tonnes of carbon dioxide. 1 credit = 1tonne of CO2

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In developing countries like India, the emission levels are much below the target fixed by the Kyoto Protocol. So, they are excluded from reduction of GHG emission. On the contrary, they are entitled to sell surplus credits to developed countries. The European countries and Japan are the major buyers of carbon credits. This is what makes trading in carbon credits such a great business opportunity. Foreign companies which cannot fulfill the protocol norms can buy surplus credit from companies in other countries.

Copenhagen summit 2009: : 

Copenhagen summit 2009: Held at the Bella Center in Copenhagen at Denmark between 7th Dec-16th Dec 2009. Around delegates from 192 countries were expected to attend the summit. Main discussion at the “Copenhagen Summit” included: Targets to curb greenhouse gas emissions, in particular by developed countries. Financial support for mitigation of and adaptation to climate change by developing countries. A carbon trading scheme aimed at ending the destruction of world’s forests by 2030.

COPENHAGEN ENDS TO A FALIURE: : 

COPENHAGEN ENDS TO A FALIURE: As Emerging countries, namely China and India, demanded a strong engagement from rich nations reducing the emission of greenhouse gases, but they refused to be subjected to restraining goals.

Overall impacts of Carbon Trading: : 

Overall impacts of Carbon Trading: By reducing carbon emissions, greenhouse gases in the atmosphere will be reduced slowing heat entrapment. Companies that emit excess carbon dioxide will be penalized and forced into taking more care. Wide ranging and comprehensive carbon trading will result in overall reduction in greenhouse gases and hence a reduction in global warming.

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Thank you