Carbon trading as a cdm strategy b.v.raghunandan


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Carbon trading as a cdm strategy b.v.raghunandan

  1. 1. Carbon Trading as a CDM Strategy-B.V.Raghunandan, SVS College, Bantwal<br />School of Management Studies,<br />University of Calicut, Kuttipuram, Kerala<br />February 23, 2011<br />
  2. 2. The Constitution of India<br />It is the duty of the state to, “protect and improve the environment and to safeguard the forests and wildlife of the country”<br />It is the duty of every citizen, “to protect and improve the natural environment including forests, lakes, rivers and wildlife”<br />It required Bhopal Gas Tragedy to make the Government to realise its duty to pass Environment Protection Act in 1986<br />
  3. 3. Certain Bitter Facts<br />Modern life is imported<br />Modern gadgets are imported<br />Pollution is imported<br />Environment Protection is also imported<br />
  4. 4. Global Warming: Wrong Direction<br />Concerns about global warming<br />Concern was about the increase in temperature<br />
  5. 5. Corrected Agenda<br />The Stockholm Convention,1995<br />Governing Council of the United Nations Environment Programme called fro Global action against Persistent Organic Pollutants, defined as, "chemical substances that persist in the environment, bio-accumulate through the food-web, and pose a risk of causing adverse effects to human health and the environment”<br />
  6. 6. Earth Summit<br />Held in 1992 in Rio De Janeiro<br />Set up UNFCCC (United Nations Framework Convention on Climate Change)<br />Confronting anthropogenic interference with the earth’s climate system<br />Prevention of climate change through reduction of green house gases to 1990 levels by 2000 and a 5.2% reduction by 2008-12<br />Common but differentiated responsibilities<br />
  7. 7. Kyoto Protocol<br />Adopted in 11 December, 1997 in Kyoto, Japan<br />Brought into force from February 16, 2005<br />Totally 192 countries ratified the Protocol <br />The USA, the prime polluter of the world has no intention of signing the Protocol<br />
  8. 8. Elements of Kyoto Protocol<br />Divided the countries into Annex I Countries and Annex II Countries<br />Annex I include developed countries that have obligations to reduce GHG emissions to 1990 levels by 2000 and 5.1% below 1990 levels by 2008-12<br />Annex II include developing countries not having any such obligations<br />
  9. 9. Elements …….contd.<br />Gases identified were carbon di oxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbonand perfluorocarbon<br />Flexible Mechanisms: Clean Development Mechanism: carbon credit and trading<br />Joint Implementation for countries in transition (Soviet Union, Central and eastern Europe)<br />
  10. 10. Clean Development Mechanism<br />A CDM Executive Board was set up<br />It will assess and approve projects in Annex II countries<br />These projects will be awarded Certified Emission Reduction <br />Annex I countries can meet their GHG emission limitations by buying CERs (measured in carbon credit)<br />
  11. 11. Carbon Credit and Trading<br />One carbon credit is equal to one metric tonne of carbon di oxide emission or one metric tonne of burning up oil<br />A trading mechanism is created for determining the price on the basis of supply and demand<br />Industrial units in Annex I countries can instal pollution control equipment or buy the carbon credits from Annex II countries<br />
  12. 12. Obligations of Kyoto Protocol<br />Green-Annex I countries-having obligation<br />Red-Annex II countries-not having the obligation<br />Yellow-In Transition countries-Joint Implementation<br />
  13. 13. Ratification of Kyoto Protocol<br />Green-Countries that have ratified the protocol<br />Red-Refused to ratify<br />
  14. 14. CDM Project Cycle<br />Stages: Project Idea, Development, Approvals, Validation, Registration and Issue of CERs<br />Finance: Debt, Equity, CER Forward Buying or CER Spot Buying<br />Price: Fixed Price, Floating Price and the Combo<br />
  15. 15. Trading Mechanism<br />
  16. 16. Carbon Dioxide Emission<br />
  17. 17. Carbon di Oxide Emission<br /> <br />The USA  25.2%  <br />China 15.2%  <br />Russia 6.7%  <br />Japan 5.4%  <br />India  4.4%<br />Germany 3.7%<br />U.K  2.4%<br />Canada  2.3%<br />Italy 2%<br />Mexico  1.7%<br />France 1.6%<br />
  18. 18. Eligibility to Participate<br />The country should have ratified the protocol<br />The project should have calculated the assigned amount of carbon emission<br />Establish a national system for estimating emissions and removals of greenhouse gases within the country.<br />They must have in place a national registry to record and track and must annually report such information to the secretariat.<br />They must annually report information on emissions and removals (carbon sinks) to the secretariat.<br />
  19. 19. Indian Scenario<br />Top Energy Guzzlers Million mt<br /> Thermal Power 160.3<br /> Iron & Steel 36.1<br /> Cement 14.5<br />Fertilisers 12<br /> Textiles 4.5<br />Aluminium 2.4<br /> Pulp and Paper 1.4<br />
  20. 20. Indian Environment Laws<br />1882:The Easement Act allowed private use of ground water and made all surface water a state property<br />1927: Indian Forest Act (Amended in 1984)-trnsit of forest produce and the duties leviable<br />1948: The Factories Act: (Amendment in 1987)-application to hazardous processes<br />1970: The Merchant Shipping Act: waste arising from ships<br />1972: The Wildlife Protection Act: (Amended in 1991)<br />1974: The Water(Prevention and Control of Pollution Act)<br />1980: The Forest (Conservation) Act<br />1981: The Air (Prevention and Control) Act<br />
  21. 21. Indian Environment Laws…contd<br />1982: The Atomic Energy Act ..Radioactive waste<br />1986; The Environment Protection Act<br />1988: The Motor Vehicles Act: …hazardous waste<br />1991: The Coastal Regulation Zone…construction along coastal line<br />1991: The Public Liability Insurance Act …accidents due to hazardous material<br />1999; The Environment (siting for industrial projects) Rules<br />2000: The Ozone Depleting Substance (Regulation and Control) Rules<br />2001: The Batteries (Management and Handling) Rules<br />2002: The Noise Pollution Rules<br />2002: The Biological Diversity Act<br />
  22. 22. Indian Authority<br />Ministry for Environment and Forests is the designated national authority<br />Many companies have been registered as carbon traders<br />MCX has tied up with ECX for offering Hedging and futures trading<br />Both futures and OTC products are introduced<br />
  23. 23. Carbon Traders in India<br />Grasim Industries Limited<br />Tata Motors Limited<br />Tata Steel Limited<br />Tata Power Company Limited<br />Reliance Energy Limited<br />Indo Gulf Fertilizers Limited<br />Valera Global Limited<br />Andhyodhaya Green Energy Limited<br />Indus Technical and Finance Limited<br />Rajasthan Renewable Energy Corporation<br />Bajaj Financial Services Limited<br />Blue Star Engineering Services Limited<br />
  24. 24. Arguments in Favour of carbon Trading<br />Polluting countries must be penalised<br />Polluting countries should pay a price<br />Projects in Annex I countries have an option: Install pollution control equipment or buy the carbon credit<br />Enable the projects in developing countries to partially finance the energy saving plans <br />
  25. 25. Arguments Against……<br />As Annex II countries have no obligations, MNCs will go to these countries through FDI<br />Developed countries produce the goods that are consumed in developing countries-the user must be penalised than the producer<br />Obligations should be on all the countries<br />Further temperature differential<br />
  26. 26. Future of Carbon Trading<br />Looks Bleak<br />The USA has convinced 13 industrialised nations to set up a new protocol after 2012<br />The countries can have the arrangement internally<br />The steam has gone out of the movement<br />
  27. 27. Alternative: Get out of Popular Misconceptions <br />Misconceptions are:<br />Nuclear energy is safer than thermal<br />Wind energy protects environment<br />All smoke is the same<br />All the smoke is bad for the environment<br />Clean environment through phenyl<br />Clean water through chlorine<br />
  28. 28. Alteration of Business Models<br />Miniaturisinghydel projects<br />Developing technology for smaller units of production for local consumption<br />Avoiding criss-cross movement of transportation<br />Actively encouraging research in fuel cells<br />Hybrid automobiles with fuel cells being one of the fuel<br />
  29. 29. Redefining Forest and Animal Welfare<br />Man-Animal co-existence<br />Encourage usage of animals in transportation<br />Killing of wild animals alone should be banned<br />Encourage rearing wild animals<br />Encourage private Tiger Farms along with tiger national parks <br />
  30. 30. THANK YOU<br />