Contents Introduction Present scenarioTypes Kyoto's flexible mechanismEmission marketHow buying carbon credit can reduce emissionCriticismRole of IndiaWhat future holds

Introduction A carbon credit is a generic term for any

tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another green house gas . 

Present scenario

Australia28%

united states23%

Former Soviet Union14%

Japan11%

European Union11%

China7%

Indonesia3%

India2%

Rest of the world3%

Fig : Carbon emission % in few business countries

China49%

india15%

brazil9%

Republic of Korea8%

maxico4%

chile2%Qatar

1%

south africa

1%

malaysia1%

indonesia1% others

7%

Annual green house gas emission by sector

Industrial processes

21%

Transportation fuels18%

Agricultural byproducts16%

Fossil fuel re-trival,processing, & distribu-

tion14%

Residential,commercial,&

other 13%

Land use & biomass burn-

ing13%

Waste disposal & treatment

4%

Kyoto’s flexible mechanism

Joint implementati

on

Clean development mechanism

International emission trading

How Buying Carbon Credits Can Reduce Emission??

13/04/2023 IABM 9

Factory Emissions

100000 tones per

year.

Permissible limit 80000

tones

Factory either

reduces emissions or

purchase carbon credits

Invests in new

machinery to reduce emission

CriticismKyoto mechanism is the only internationally

agreed mechanism for regulating carbon credit activities

The Kyoto trading period only applies for five years between 2008 and 2012.

Role of IndiaIndia 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.

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.

India is the world’s sixth largest emitter of carbon dioxide with its present share in global emissions estimated at 6 per cent

examples  Jindal Vijaynagar SteelPowerguda in Andhra PradeshHandia Forest in Madhya Pradesh

Benefits for IndiaIt will gain in terms of advanced technological

improvements and related foreign investments It will contribute to the underlying theme of

green house gas reduction by adopting alternative sources of energy

Indian companies can make profits by selling the CERs to the developed countries to meet their emission targets.

TRADING OF CERS:

Two Commodity exchanges trading in Carbon Credits

Multi Commodity Exchange (MCX), &National Commodity and Derivatives

Exchange (NCDEX)

Financial support in IndiaThe World Bank has entered into an

agreement with Infrastructure Development Finance Company (IDFC),

IDBI has set up a dedicated Carbon Credit desk

HDFC Bank has signed an agreement with Cantor CO2E India Pvt. Ltd and MITCON Consultancy Services Limited (MITCON)

Legal issueIs a carbon credit an interest in real property

or personal propertyIs a carbon credit a mineral right? Is a carbon credit tangible or intangible?

Financial issuesHow to account for expenditure on CDM

projectsWhether or not to account for self-generated

CERs held with registryIf credit are to be accounted, at what point of

time these should be recognized in books of account & at what value,&

How to account for sale consideration and its disclosure in accounts and notes

Carbon pricing key issue for industryHow will a carbon price impact on business?What are the risk for business?What don’t we know ?What can business do to prepare ?Why does the govt. want to reduce carbon

emission ?How should emission reduction be achieved?What other countries doing to reduce emission?How does a carbon price reduce emission ?How does the govt. proposal work ?What is the chamber doing to support members ?

Economical issuecriticism

Costs and valuationEthics and fairnessCoaseEquityTaxes v/s capsTrading Incentives and allocation

Form of colonialismNon-existent emission

reductionArtificial production of

green house gasesCarbon trade watch

Ethical issuesJustice of the Cap Allocating Global Commons Resources as

Property Rights. Environmental Effectiveness Distributive Justice Procedural Justice

Impact on BusinessFinancial service companies benefited from

the emergence of new market to expand.Companies focused on System and software

companies to monitor carbon emission for corporations.

Pros & cons of carbon tradingCap & TradeBaseline & CreditGeneral Costs v/s BenefitsCarbon Trading v/s carbon Taxation

What future holds..