Carbon Trading Presentation Final

8/14/2019 Carbon Trading Presentation Final

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WELCOMEWELCOME


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CARBON TRADINGCARBON TRADING

Presented By:Presented By:

Samal Luna Roll No 01Samal Luna Roll No 01Rohan Kulkarni Roll No 16Rohan Kulkarni Roll No 16


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Todays AgendaTodays Agenda A Brief BackgroundA Brief Background UNFCCCUNFCCC Kyoto ProtocolKyoto Protocol Clean Development MechanismClean Development Mechanism What are Carbon Credits?What are Carbon Credits? Trading in Carbon CreditsTrading in Carbon Credits Copenhagen Summit- ExcerptsCopenhagen Summit- Excerpts Road Ahead for IndiaRoad Ahead for India


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A Brief BackgroundA Brief Background

Climate ChangeClimate Change

Rapid Industrial GrowthRapid Industrial Growth

Increased Energy ConsumptionIncreased Energy Consumption

Increased CO2 & other GHGs EmissionIncreased CO2 & other GHGs Emission

Global Warming due to increased concentration of GHGGlobal Warming due to increased concentration of GHG

Increasing Sea LevelIncreasing Sea Level

Changes in Wind & PrecipitationChanges in Wind & Precipitation

Changes in Crop YieldsChanges in Crop Yields


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Global Warming- Disaster for CropGlobal Warming- Disaster for CropYieldsYields


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The Primary goal UNFCCC wasThe Primary goal UNFCCC was to stabilize theto stabilize theamount of greenhouse gases in the atmosphereamount of greenhouse gases in the atmosphereat a level that prevents dangerous man-madeat a level that prevents dangerous man-madeclimate changes.climate changes.

In 1990, the United Nations General AssemblyIn 1990, the United Nations General Assemblydecided to start work on a climate changedecided to start work on a climate changeconvention.convention.

154 countries signed the UNFCCC at the UN154 countries signed the UNFCCC at the UN

Summit in Rio de Janeiro in 1992.Summit in Rio de Janeiro in 1992.193 countries including the USA have ratified the193 countries including the USA have ratified the

convention.convention.

United Nations Framework ConventionUnited Nations Framework Conventionfor Climate Change (UNFCCC)for Climate Change (UNFCCC)


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Most countries have agreed to do somethingabout climate change, but the industrializedcountries have to do the maximum.

Countries that have ratified UNFCCC will have tocommit themselves to monitoring & reportingtheir emissions of GHGs.

What does it say in the convention?What does it say in the convention?


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Countries behind UNFCCCCountries behind UNFCCC

The countries behind the UNFCCC are divided into severalpartially overlapping groups:

Annex I countries:Annex I countries:

24 industrialised countries which in 1992 were members of the24 industrialised countries which in 1992 were members of the

Organisation for Economic Cooperation and DevelopmentOrganisation for Economic Cooperation and Development

(OECD)(OECD)

14 countries which at the time were in the middle of a14 countries which at the time were in the middle of a

transition from a centrally-controlled planned economy to atransition from a centrally-controlled planned economy to a

market economymarket economy European Union (EU)European Union (EU)

Total of 41 countries.Total of 41 countries.


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Annex II countries:Annex II countries:

Annex II countries are the same as in Annex I apartAnnex II countries are the same as in Annex I apart

from the transition economies.from the transition economies.

These countries undertake to pay a share of the costs of These countries undertake to pay a share of the costs of

the developing countries reductions in emissions.the developing countries reductions in emissions.

For E.g. U.S, U.K, Germany, France, Japan, Australia.For E.g. U.S, U.K, Germany, France, Japan, Australia.


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Non-Annex I countries:Non-Annex I countries: Developing countries that have ratified the convention.Developing countries that have ratified the convention.

For E.g. : India, China, Brazil, PakistanFor E.g. : India, China, Brazil, Pakistan

Observers:Observers: UNs development programme (UNDP) and environmentalUNs development programme (UNDP) and environmental

programme (UNEP) are observers to the UNFCCC.programme (UNEP) are observers to the UNFCCC.

Other observers include the International Energy AgencyOther observers include the International Energy Agency

(IEA) and the confederation of oil-producing countries,(IEA) and the confederation of oil-producing countries,

OPEC.OPEC.


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Kyoto Protocol : An OverviewKyoto Protocol : An Overview

May 1992: UNFCCC established framework forMay 1992: UNFCCC established framework forcontaining global warming.containing global warming.

Dec 1997: Following intense negotiation in Kyoto,Dec 1997: Following intense negotiation in Kyoto,Japan a protocol was agreed upon by over 100Japan a protocol was agreed upon by over 100countries.countries.

Feb 2005: 141 countries, including EU, Japan,Feb 2005: 141 countries, including EU, Japan,Canada, Russia signed the Kyoto Protocol and it gotCanada, Russia signed the Kyoto Protocol and it gotratified w.e.f 16ratified w.e.f 16 thth Feb, 2005.Feb, 2005.

- The U.S remained a key non-signatory.- The U.S remained a key non-signatory. Dec 2009 : Total 194 countries ratified the protocolDec 2009 : Total 194 countries ratified the protocol

including the U.S.including the U.S.


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Kyoto Protocol: The GistKyoto Protocol: The GistThe Kyoto Protocol sets legally binding targets forThe Kyoto Protocol sets legally binding targets for

reducing GHGs :reducing GHGs :- Annex I countries (Industrialized): To reduce GHG- Annex I countries (Industrialized): To reduce GHG

emissions by 5% below 1990 levels, by year 2012.emissions by 5% below 1990 levels, by year 2012.- EU members committed to reduce their average- EU members committed to reduce their average

emissions by 8%.emissions by 8%.- Annex II countries: To provide funding & transfer of - Annex II countries: To provide funding & transfer of

technology to non- Annex I countries.technology to non- Annex I countries.- Non-Annex I (developing countries): No- Non-Annex I (developing countries): No

commitments.commitments.


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Green House GasesGreen House Gases

6 GHGs are regulated under the Kyoto Protocol6 GHGs are regulated under the Kyoto Protocol Carbon dioxide (CO2)Carbon dioxide (CO2)

Methane (CH4)Methane (CH4) Nitrous oxide (N2O)Nitrous oxide (N2O)

Hydro fluorocarbons (HFCs)Hydro fluorocarbons (HFCs) Per fluorocarbons (PFCs)Per fluorocarbons (PFCs) Sulphur Hexafluoride (SFs)Sulphur Hexafluoride (SFs)

25 other gases, including chloroform, CO & water25 other gases, including chloroform, CO & water

vapour that influence climate changevapour that influence climate change

Gs are key ones that can be controlled by human intervention


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Kyoto Protocol: Issues & drawbacksKyoto Protocol: Issues & drawbacks Short Horizon: First phase of the protocolShort Horizon: First phase of the protocol

covers the period upto 2012.covers the period upto 2012.

- It will have to be further extended beyond 2012- It will have to be further extended beyond 2012

Country targets defined, but division of that byCountry targets defined, but division of that byindustry & sector within countries not yetindustry & sector within countries not yet

structured.structured.


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Clean Development Mechanism (CDM)Clean Development Mechanism (CDM)

CDMCDM is an arrangement under the Kyoto Protocol allowingis an arrangement under the Kyoto Protocol allowingindustrialized countries with a greenhouse gas reductionindustrialized countries with a greenhouse gas reduction

commitment (called Annex 1 countries) to invest in venturescommitment (called Annex 1 countries) to invest in ventures

that reduce emissions in developing countries as anthat reduce emissions in developing countries as an

alternative to more expensive emission reductions in theiralternative to more expensive emission reductions in their

own countriesown countries ..

Planned reductions would not occur without the additionalPlanned reductions would not occur without the additional

incentive provided by emission reductions credits, a conceptincentive provided by emission reductions credits, a concept

known as "additionality".known as "additionality".


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CDM Project Stages & Parties InvolvedCDM Project Stages & Parties Involved

Design

Validation

Registration

Implementation

Monitoring & Reporting

Verification

Certification

Approval

StakeholderConsultation


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Validation, Verification & CertificationValidation, Verification & Certification

Year

G

HGemissions[tCO2-eq

] Emission baseline

With project emissions

Additional emissionreductions

Projectimplementation

Validation of project

design,baseline and monitoringplan

Verification/Certification of

emissionreductions


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CDM Validation ProcessCDM Validation Process

Preliminary Validation Report

Validation Team SelectionValidationSelectionValidation Contract

EstablishmentDevelop ProjectDocumentation

Resolution of Corrective Action RequestsResolution of Corrective Action RequestsFinal Validation Report and OpinionFinal Validation Report and Opinion

Background InvestigationsDocument Review Follow-up Interviews

EB Approval of Methodologies

Public Stakeholder Comment Process (30 days)

EB RegistrationEB Registrationof projectof project

ne & Monitoring Methodology Check


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What are Carbon Credits?What are Carbon Credits?

Permit that allows the holder to emit one ton of carbonPermit that allows the holder to emit one ton of carbondioxide.dioxide.

Credits are awarded to countries or groups that haveCredits are awarded to countries or groups that havereduced their green house gases below their emissionreduced their green house gases below their emissionquota.quota.

These are These are Entitlement CertificatesEntitlement Certificates awarded by awarded byUNFCCC to the implementers of CDM projects.UNFCCC to the implementers of CDM projects.

1 Carbon Credit =1 Carbon Credit =

1 Ton of CO2 or its equivalent GHG Emission1 Ton of CO2 or its equivalent GHG Emission


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Types of Carbon CreditsTypes of Carbon Credits

Carbon Offset Credits (COC) Carbon Reduction Credits (CRCs)

clean forms of energy production, wind, solar, hydro and bio fuels.rage of Carbon from our atmosphere through bio-sequestration (refore


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Transaction that transfers carbon credits between two

parties under the Kyoto Protocol.

Buyer pays the seller cash in exchange for carboncredits, thereby allowing the purchaser to emit more

carbon dioxide.

Emission Reduction PurchaseEmission Reduction PurchaseAgreement (ERPA)Agreement (ERPA)


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Emissions trading (ET) is a mechanism that enablescountries with legally binding emissions targets to buyand sell carbon credits among themselves.

World Carbon Exchanges:i. Chicago Carbon Exchange, U.S

ii. European Carbon Exchange, Londoniii. MCX Commodities Exchange, Mumbai

Some of the Carbon Financial Instruments are:1. Futures Trading

2. Spot Trading

Trading in Carbon CreditsTrading in Carbon Credits


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Price Influencing FactorsPrice Influencing Factors

Demand-Supply Mismatch

Government Policy Issues

Crude Oil Prices

Coal Prices

Weather/Fuel Prices

Foreign Exchange Prices

Global Economic Growth/Activity


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Copenhagen Summit 2009Cop enhagen Summit 2009

Representatives of 192 countries met to try & Representatives of 192 countries met to try & hammer out an agreement that will save out thehammer out an agreement that will save out the

planet from the fallouts of global warming andplanet from the fallouts of global warming and

climate changeclimate change


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Copenhagen AccordCopenhagen Accord

It sets the goal of keeping rise in Global temperature within2 degree Celsius to be able to deal with challenges of theGlobal warming.

It aims at raising US$ 100 billion per year by developedcountries by 2020, to help poor countries adapt to climatechange.

It sets to reduce deforestation in return for cash fromdeveloped countries.

t Climate Change Summit to be held in Mexico in December 20


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Road Ahead for IndiaRoad Ahead for India


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How can youContribute

???


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Carbon Trading Presentation Final