Avdesh Singh

8/2/2019 Avdesh Singh

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INTRODUCTION TO THE TOPIC


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INTRODUCTION TO THE TOPIC

The project purports to throw some light on the concept of Carbon

credit. A permit that allows the holder to emit one ton of carbon

dioxide. Credits are awarded to countries or groups that have reduced

their greenhouse gases below their emission quota. Carbon credits can

be traded in the international market at their current market price.

Global warming refers to the recent increase in the Earth's

temperature. The effects of this climate change are already being felt

around the world. Scientists predict that temperatures will rise up to

6C further over the next century. This may cause rises in sea level,

extreme weather events such as hurricanes and heat waves, and war

and disease, particularly in developing countries.

The ideal solution would be an immediate and drastic drop in global

carbon emissions. However this is not going to happen in our lifetimes.

In fact, rapid economic development in countries such as China and

India, as well as ongoing growth in the rest of the world, mean that

carbon emissions are still increasing year on year. The Kyoto protocol is

a first international attempt to address the issue seriously, but it has

met with limited success.

The data was collected and analyzed to obtain conclusions. This report

carries an introduction of the Carbon Credit, detail of the methodologyfollowed detailed data analysis and the results so obtained with the

variety of graphs along with given report.


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EXECUTIVE SUMMARY

I, Avdesh Singh get loyal opportunity to take interest and to survey

entire world economy which is facing problem gaining Carbon Credit.


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This study is conducted to study the impact of carbon trading on Indian

companies.

With the increase in Greenhouse Gas (GHG) emissions in the

atmosphere, the global temperature has been on a constant rise. In last

65 years the amount of anthropogenic (made or induced by humans)

carbon dioxide has risen from 280 parts per million to 380. With the

current energy mix favoring the use of fossil fuels, the level is expected

to increase at a rapid pace. This has led to a global phenomenon called

the Greenhouse Effect. By increasing day to day pollution from various

industry in our locality region or as well as overseas Industry like US,

Europe, Asia etc. Basically our projects related to the carbon emission

reduction in developing countries. 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. Carbon credits are a part of international emission

trading norms. They incentivize companies or countries that emit less

carbon. The total annual emissions are capped and the market allocatesa monetary value to any shortfall through trading. Businesses can

exchange, buy or sell carbon credits in international markets at the

prevailing market price.


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WHAT IS GREENHOUSE EFFECT?

The sun heats up the earth by sending solar rays towards us. Some of

these rays dont get through our atmosphere. Those that do, warm up

the earth. When the earth warms up it radiates its own rays of heat

infrared rays. Greenhouse gases absorb those, which dont escape past

the atmosphere. These greenhouse gases warm the earth so it is at the

temperature we experience now. Without this process the earth would

be some 30o C cooler and life on our planet would be very different.

However, we are producing too many greenhouse gases, which mean

they are absorbing more heat and warming the earth too much this is

called global warming. One of the main greenhouse gases is carbon

dioxide, which can be created from chopping down and burning of

trees. The fuel used in cars and machinery also creates carbon dioxide,

as do coal and natural gas. Therefore, if we reduce the use of fuel and

reduce deforestation, the amount of greenhouse gas around earth

should also be reduced. Scientists say it is already too late to prevent

global warming and therefore climate change, but by reducing

greenhouse gases we could still limit the impact. Even a change in

temperature of under 1 o C is enough to cause changes in rainfall.


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EFFECT OF GLOBAL WARMING

Seawaters could rise almost a meter in this century, and willcontinue to move up.

Some coastal regions already see seasonal flooding, and thesituation is expected to worsen as water levels rise.

Coral reefs are under pressure from changes in water level andtemperature. As most carbon goes into sea, plankton could suffer,

and that would affect species higher up the food chain.

Temperature becomes pretty unstable these days. A summerbecomes much hotter and a winter becomes much colder.


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WHAT IS CARBON CREDIT?

As nations have progressed we have been emitting carbon, or gases

which result in warming of the globe. Some decades ago a debate

started on how to reduce the emission of harmful gases that

contributes to the greenhouse effect that causes global warming. So,

countries came together and signed an agreement named the Kyoto

Protocol.

India and China are likely to emerge as the biggest sellers and Europe is

going to be the biggest buyers of carbon credits.

Last year global carbon credit trading was estimated at $5 billion, with

India's contribution at around $1 billion. India is one of the countries

that have 'credits' for emitting less carbon. India and China have surplus

credit to offer to countries that have a deficit.

India has generated some 30 million carbon credits and has roughly

another 140 million to push into the world market. Waste disposalunits, plantation companies, chemical plants and municipal

corporations can sell the carbon credits and make money.

Carbon, like any other commodity, has begun to be traded on India's

Multi Commodity Exchange since last the fortnight. MCX has become

first exchange in Asia to trade carbon credits.

Developed countries, mostly European, had said that they will bring

down the level in the period from 2008 to 2012. In 2008, these

developed countries have decided on different norms to bring down

the level of emission fixed for their companies and factories.


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A company has two ways to reduce emissions. One, it can reduce the

GHG (greenhouse gases) by adopting new technology or improving

upon the existing technology to attain the new norms for emission of

gases. Or it can tie up with developing nations and help them set up

new technology that is eco-friendly, thereby helping developing

country or its companies 'earn' credits.

India, China and some other Asian countries have the advantage

because they are developing countries. Any company, factories or farm

owner in India can get linked to United Nations Framework Convention

on Climate Change and know the 'standard' level of carbon emission

allowed for its outfit or activity. The extent to which I am emitting less

carbon (as per standard fixed by UNFCCC) I get credited in a developingcountry. This is called carbon credit.

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 earnbillions 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

incentivize 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 marketprice.

India and China are likely to emerge as the biggest sellers and Europe is

going to be the biggest buyers of carbon credits.


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Last year global carbon credit trading was estimated at $5 billion, with

India's contribution at around $1 billion. India is one of the countries

that have 'credits' for emitting less carbon. India and China have surplus

credit to offer to countries that have a deficit.

India has generated some 30 million carbon credits and has roughly

another 140 million to push into the world market. Waste disposal

units, plantation companies, chemical plants and municipal

corporations can sell the carbon credits and make money.

Carbon, like any other commodity, has begun to be traded on India's

Multi Commodity Exchange since last the fortnight. MCX has become

first exchange in Asia to trade carbon credits.

So how do you trade in carbon credits? Who can trade in them, and at

what price?


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HOW DOES IT WORK IN REAL LIFE?

ASSUME THAT BRITISH PETROLEUM IS RUNNING A PLANT IN THE UNITED

KINGDOM.SAY, THAT IT IS EMITTING MORE GASES THAN THE ACCEPTED NORMS OF

THE UNFCCC.IT CAN TIE UP WITH ITS OWN SUBSIDIARY IN, SAY,INDIA OR CHINA

UNDER THE CLEAN DEVELOPMENT MECHANISM.IT CAN BUY THE 'CARBON CREDIT'

BY MAKING INDIAN OR CHINESE PLANT MORE ECO-SAVVY WITH THE HELP OF

TECHNOLOGY TRANSFER.IT CAN TIE UP WITH ANY OTHER COMPANY LIKE INDIAN

OIL [GET QUOTE], OR ANYBODY ELSE, IN THE OPEN MARKET.

In December 2008, an audit will be done of their efforts to reduce gases

and their actual level of emission. China and India are ensuring that

new technologies for energy savings are adopted so that they become

entitled for more carbon credits. They are selling their credits to their

counterparts in Europe. This is how a market for carbon credit is

created.

Every year European companies are required to meet certain norms,

beginning 2008. By 2012, they will achieve the required standard of

carbon emission. So, in the coming five years there will be a lot of

carbon credit deals.
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UNDERSTANDING THE SYSTEM

AND LOGIC BEHIND IT

Science has correlated climate over the ages with core samples from ice

sheets and found that carbon dioxide levels fluctuate with climatic

events. Only recently has science been able to understand how this

CO2 actually works to trap the heat in the atmosphere and by calling it

the greenhouse effect gives us the basic understanding of what goes

on.

Its pretty simple really in theory. All growing things absorb carbon

which ultimately ends up in the soil. Planting trees reduces the carbon

in the atmosphere but not if they are then cut down and burnt and

crops that are planted and harvested will not actually store carbon

within them. Long term plans are needed. Crops can be farmed in such

a way that the soils are not ploughed to let the stored carbon escape.Weeds and borders to fields can be encouraged. Forests can be left to

stand. Fuel usage can be cut and power generation can be more

efficient and all this reduced consumption of carbon will mean that less

carbon credits will have to be purchased.

The money that purchases carbon credits will ultimately be used to give

grants to further carbon saving schemes. New Zealand has alreadyfunded some wind generation projects from the money gained from

selling carbon credits. Ireland has recently purchased 95% of its carbon

credits from overseas to offset the millions of tons of CO2 its industries

will develop for the forthcoming year. The other 5% will come from


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internally as they have new practices of farming and bean planting

trees since 1990. Some tree bound countries do not necessarily have

loads of carbon credits to sell as they have not made any attempts to

increase the number of trees since 1990. There are complications to beconquered though. In Australia, Virgin has tried to introduce its airline

but has been deterred by the need to offset its CO2 pollution by the

purchase of Carbon Credits which makes them uncompetitive.


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HOW DO CARBON CREDITS SAVES

THE PLANET

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Avdesh Singh