Carbon Credits and Trading

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    Carbon credits and trading: Present and

    future scenarios

    Presented By :-

    NITIN P. AHIRE -1003

    KISHORI M. MAHADIK -1049

    SAM ALLWYN-1004PRIYA B. CHAUDHARY

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    THE BEGINNINGThe concept of carbon credits came into

    existence as a result of increasing awareness of theneed to control greenhouse gas emissions.

    (Greenhouse gases are mainly Water vapour, Carbon dioxide,Methane, Nitrous oxide, Ozone and CFCs)

    The IPCC (Intergovernmental Panel on Climate

    Change) has observed that:

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    Policies that provide a real or implicit price of carbon

    could create incentives for producers and consumers to

    significantly invest in low-GHG products, technologies andprocesses. Such policies could include economic

    instruments, government funding and regulation

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    CARBON CREDIT

    Carbon credits are an element used to aid in

    regulation of the amount of gases that are being

    released into the air. This is part of a larger

    international plan which has been created in aneffort to reduce global warming and its effects.

    The plan works by capping the amount of total

    emissions that can be released by one company orbusiness.

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    Carbon credits are measured in tonnes of carbon dioxide. 1 credit = 1 tonne of

    CO2. 1 tonne of CO2 would fill a swimming pool the size of 10x25 meters and 2

    meters deep.

    The credits need to be authentic, scientifically based and comply with a

    regulatory body for these to be traded with confidence. Verification is

    essential.

    These tradable carbon credits are then given a monetary value set by the

    market and can be bought and sold between groups on state, national and

    international markets.

    The owner the carbon credits has the right to emit 1 tonne of CO2 per creditor trade if not needed.

    Credits may also be retired, meaning taken off the market. They can be

    donated to non-profit groups and are tax deductible in countries where trading

    is taking place. Large amounts of credits can be bought and retired, thus

    driving the price up and forcing organization to decrease their carbon

    emissions which is fantastic for the environment.

    As an individual or business you can purchase carbon credits to offset your

    UNAVOIDABLE carbon emissions (i.e. car and air travel) under a voluntary

    or mandatory scheme.

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    There are two types of market in carboncredit:

    1. Compliance Market (Annexure I

    countries)

    2. Voluntary Market (Non- Annexure

    countries)

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    KYOTO PROTOCOL

    The Kyoto Protocol is a legally binding agreement that arose out of the

    UNFCCC to tackle climate change through a reduction of green house gas

    emissions.

    Countries (those listed in Annex I) are legally bound to reduce man-made

    green house gases emissions by approximately 5.2%

    Individual countries have their own reduction targets outlined in Annex B

    of the Kyoto Protocol

    It was adopted in Kyoto, Japan, on 11th December 1997

    Objective:

    stabilisation of greenhouse gas concentrations in the

    atmosphere at a level that would prevent air pollution

    interference with the climate system

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    1. Annex 1 countries: Developed nations like Australia, Canada,European Union (high emitters of GHG).

    2. Annex 2 countries: Subgroup of Annex1 nations, developed

    nations that pay for the cost of developing nations, such as

    Japan, UK, USA, France (high emitters of GHG).3. Developing countries: Best examples are India and China

    (low emitters of GHG).

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    HOW DOESIT WORK

    Being developing countries, India, China etc. have the advantage. Any

    company, factories or farm owner can get linked to United NationsFramework 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 developing country. This is typically what we call carbon credit.

    A company in a developed nation can reduce its GHG emissions by:

    a. Adopting new technology or improving upon the existing technology toattain the new norms for emission of gases, or

    b. Tie up with developing nations and help them set up new technology that is

    eco-friendly, thereby helping the developing country or its companies

    reduce their GHG emission levels and 'earn' carbon credits. These credits

    can later be sold.Alternatively, an organization from a developed nation exceeding its GHG

    emission allowance can purchase carbon credits from an organization in a

    developing nation.

    Carbon offset: One carbon offset represents the reduction of one metric

    tonne of carbon dioxide or its equivalent in other greenhouse gases.

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    CLEAN DEVELOPMENT MECHANISM

    Under the CDM and the UNFCCC, any company from the

    developed world can tie up with a company in the

    developing country that is a signatory to the Kyoto

    Protocol.

    The industrialized nation and its companies set up new eco

    friendly technologies in developing nations that aim to

    further reduce emission level of GHG, thereby increasing

    carbon credits.

    The companies in developing countries must adopt the

    newer technologies, emitting lesser gases, and save energy.

    Consequently, earning credits

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    CDM PROCESS

    IDENTIFICATION OF PROJECT AND DEVELOPMENT

    OF PROJECT CONCEPT NOTE

    DEVELOPMENT OF PROJECT DESIGN DOCUMENT

    HOST COUNTRY APPROVAL

    SUBMISSION OF THE PDD AND HOST COUNTRY

    APPROVAL VALIDATOR

    MAKE PDD COMPLETELY AVAILABLE FOR 30 DAYS

    VALIDATION OF PROJECT

    SUBMISSION OF VALIDATION REPORT AND PDD

    REGISTRATION WITH THE CDM

    PROJECT IMPLEMENTATION AND MONITORING

    VERIFICATION AND CERTIFICATION

    POSSIBLE REVIEW BY CDM EXECUTIVE BOARD

    ISSUANCE OF CERS TO PROJECT DEVELOPERS

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