Carbon Credit trading
Carbon dioxide, the most important greenhouse gas produced by combustion of fuels, has become a cause of global panic as its concentration in the Earth''''s atmosphere has been rising alarmingly.
This devil, however, is now turning into a product that helps people, countries, consultants, traders, corporations and even farmers earn billions of rupees. This was an unimaginable trading opportunity not more than a decade ago.
Carbon
credits are a part of international emission trading norms. They incentivise
companies or countries that emit less carbon. The total annual
emissions are capped and the
market allocates a monetary value to any shortfall through trading. Businesses can exchange, buy or sell carbon credits in international markets at the prevailing market price.
India and China are likely to emerge as the biggest sellers and Europe is going to be the biggest buyers of carbon credits.
More than 112 Indian companies, including Hindustan Lever Ltd and Tata Steel, are set to trade in carbon credits.
These companies are ready with clean technologies to bring down the emission levels of greenhouse gases and sell certified emission reductions (CERs) to developed countries.
This is the largest portfolio for any country signatory to the United Nations Framework of Climate Change Convention (UNFCCC). The UN body certifies countries and companies that can trade in carbon credits under the Kyoto Protocol.
According to World Bank estimates, India is
expected to rake in $100 million annually by trading in carbon credits and Indian companies are expected to corner at least 10 per cent of the global market in the initial years.
Globally, greenhouse gas emissions are expected to come down by 2.5 billion tonne by 2012. According to industry estimates, Indian companies are expected to generate at least $8.5 billion at the going rate of $10 per tonne of CER.
One tonne of carbon dioxide reduced through the Clean Development Mechanism (CDM) project, when certified by a designated entity, becomes a tradable CER.
"It is cheaper for developing countries to reduce emissions than developed countries. As a result, buyers are coming to Indian shores," said Teri Associate Fellow Vivek Kumar. Brazil and China are emerging two of India''''s strong competitors.
Published: February 20, 2008
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