Clean development mechanism (cdm) and carbon trading b.v.raghunandan


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Clean development mechanism (cdm) and carbon trading b.v.raghunandan

  1. 1. Clean Development Mechanism and Carbon Trading -B.V.Raghunandan, SVS College, Bantwal UGC Sponsored National Conference on, ”The Green Umbrella: Green Business Opportunities” Canara First Grade College, MangalorePage 1
  2. 2. The Constitution of India • It is the duty of the state to, “protect and improve the environment and to safeguard the forests and wildlife of the country” • It is the duty of every citizen, “to protect and improve the natural environment including forests, lakes, rivers and wildlife” • It required Bhopal Gas Tragedy to make the Government to realise its duty to pass Environment Protection Act in 1986 Page 2
  3. 3. Certain Bitter Facts • Modern life is imported • Modern gadgets are imported • Pollution is imported • Environment Protection is also imported in being hypocritical • The biggest polluter, the USA is a non-participant globally • Anti-Septic Life damages environment more • Man’s efforts are nothing before that of Nature Page 3
  4. 4. Global Warming: Wrong Direction • Concerns about global warming • Concern was about the increase in temperature Page 4
  5. 5. Corrected Agenda • The UN Conference on Human Environment called The Stockholm Conference,1972 • 26 Principles Emerged from the Conference addressed by Olaf Palme and Indira Gandhi • In 1973, EU created Environmental and Consumer Protection Directorate • The awareness became international Page 5
  6. 6. The UN Action • Governing Council of the United Nations Environment Programme called for 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” Page 6
  7. 7. Earth Summit • Held in 1992 in Rio De Janeiro • Set up UNFCCC (United Nations Framework Convention on Climate Change) • Prevention of climate change through reduction of green house gases to 1990 levels by 2000 and a 5.2% reduction by 2008-12 Page 7 • Common but differentiated responsibilities
  8. 8. Images of Earth Summit Page 8
  9. 9. Kyoto Protocol • • • • Adopted in 11 December, 1997 in Kyoto, Japan Brought into force from February 16, 2005 Totally 192 countries ratified the Protocol The USA, the prime polluter of the world had no intention of signing the Protocol Page 9
  10. 10. Elements of Kyoto Protocol • Divided the countries into Annex I Countries and Annex II Countries • 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 • Annex II include developing countries not having any such obligations Page 10
  11. 11. Elements …….contd. • Gases identified were carbon di oxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbon and perfluorocarbon • Flexible Mechanisms: Clean Development Mechanism: carbon credit and trading Page 11
  12. 12. Clean Development Mechanism • A CDM Executive Board was set up • It will assess and approve projects in Annex II countries • These projects will be awarded Certified Emission Reduction • Annex I countries can meet their GHG emission limitations by buying CERs (measured in carbon credit) Page 12
  13. 13. Carbon Credit and Trading • One carbon credit is equal to one metric tonne of carbon di oxide emission or one metric tonne of burning up oil • A trading mechanism is created for determining the price on the basis of supply and demand • Industrial units in Annex I countries can instal pollution control equipment or buy the carbon credits from Annex II countries Page 13
  14. 14. Obligations of Kyoto Protocol • Green-Annex I countries-having obligation • Red-Annex II countries-not having the obligation • Yellow-In Transition countries-Joint Implementation 14 Page
  15. 15. Ratification of Kyoto Protocol • Green-Countries that have ratified the protocol • Red-Refused to ratify Page 15
  16. 16. CDM Project Cycle • Stages: Project Idea, Development, Approvals, Validation, Registration and Issue of CERs • Finance: Debt, Equity, CER Forward Buying or CER Spot Buying • Price: Fixed Price, Floating Price and the Combo Page 16
  17. 17. Trading Mechanism Page 17
  18. 18. Carbon Dioxide Emission Page 18
  19. 19. Carbon di Oxide Emission • • • • • The USA China Russia Japan India 25.2% 15.2% 6.7% 5.4% 4.4% • • • • • • Germany U.K Canada Italy Mexico France 3.7% 2.4% 2.3% 2% 1.7% 1.6% Page 19
  20. 20. Eligibility to Participate • The country should have ratified the protocol • The project should have calculated the assigned amount of carbon emission • Establish a national system for estimating emissions and removals of greenhouse gases within the country. • They must have in place a national registry to record and track and must annually report such information to the secretariat. • They must annually report information on emissions and removals (carbon sinks) to the secretariat. Page 20
  21. 21. Indian Scenario Top Energy Guzzlers Thermal Power Iron & Steel Cement Fertilisers Textiles Aluminium Pulp and Paper Million mt 160.3 36.1 14.5 12 4.5 2.4 1.4 Page 21
  22. 22. Indian Environment Laws • 1882:The Easement Act allowed private use of ground water and made all surface water a state property • 1927: Indian Forest Act (Amended in 1984)-transit of forest produce and the duties leviable • 1948: The Factories Act: (Amendment in 1987)application to hazardous processes • 1970: The Merchant Shipping Act: waste arising from ships • 1972: The Wildlife Protection Act: (Amended in 1991) • 1974: The Water(Prevention and Control of Pollution Act) • 1980: The Forest (Conservation) Act • 1981: The Air (Prevention and Control) Act Page 22
  23. 23. Indian Environment Laws…contd • 1982: The Atomic Energy Act ..Radioactive waste • 1986; The Environment Protection Act • 1988: The Motor Vehicles Act: …hazardous waste • 1991: The Coastal Regulation Zone…construction along coastal line • 1991: The Public Liability Insurance Act …accidents due to hazardous material • 1999; The Environment (siting for industrial projects) Rules • 2000: The Ozone Depleting Substance (Regulation and Control) Rules • 2001: The Batteries (Management and Handling) Rules • 2002: The Noise Pollution Rules • 2002: The Biological Diversity Act Page 23
  24. 24. Indian Authority • Ministry for Environment and Forests is the designated national authority • Many companies have been registered as carbon traders • MCX has tied up with ECX for offering Hedging and futures trading • Both futures and OTC products are introduced Page 24
  25. 25. Carbon Traders in India • Grasim Industries Limited • Tata Motors Limited • Tata Steel Limited • Tata Power Company Limited • Reliance Energy Limited • Indo Gulf Fertilizers Limited • Valera Global Limited • Andhyodhaya Green Energy Limited • Indus Technical and Finance Limited • Rajasthan Renewable Energy Corporation • Bajaj Financial Services Limited • Blue Star Engineering Services Limited Page 25
  26. 26. Arguments in Favour of carbon Trading • Polluting countries must be penalised • Polluting countries should pay a price • Projects in Annex I countries have an option: Install pollution control equipment or buy the carbon credit • Enable the projects in developing countries to partially finance the energy saving plans Page 26
  27. 27. Arguments Against…… • As Annex II countries have no obligations, MNCs will go to these countries through FDI • Developed countries produce the goods that are consumed in developing countries-the user must be penalised than the producer • Obligations should be on all the countries • Further temperature differential Page 27
  28. 28. Future of Carbon Trading • Looks Bleak • The USA has convinced 13 industrialised nations to set up a new protocol after 2012 • The countries can have the arrangement internally • The steam has gone out of the movement Page 28
  29. 29. Alternative: Get out of Popular Misconceptions • • • • • • • • Misconceptions are: Nuclear energy is safer than thermal Wind energy protects environment All smoke is the same All the smoke is bad for the environment Clean environment through Phenyl, Ddt, BHC Clean water through chlorine Sponsoring Zero Based Research Page 29
  30. 30. Alteration of Business Models • Miniaturising hydel projects • Developing technology for smaller units of production for local consumption • Avoiding criss-cross movement of transportation • Actively encouraging research in fuel cells • Hybrid automobiles with fuel cells being one of the Page 30 fuel
  31. 31. Redefining Forest and Animal Welfare • Man-Animal coexistence • Encourage usage of animals in transportation • Killing of wild animals alone should be banned • Encourage rearing wild animals • Encourage private Tiger Farms along with tiger national parks Page 31
  32. 32. THANK YOU Page 32