carbon credits


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carbon credits

  1. 1. CARBON CREDITS• What are carbon credits?• Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one ton of carbon dioxide reduction.
  2. 2. REDUCING CARBON CREDITS• Rainforest Credits and Tropical Sierra are working to build an online information database known as the Rainforest Encyclopedia for businesses and industries to research and calculate what they need to invest in to offset their greenhouse gas emissions.• Increasing awareness on the need for pollution control.• Carbon Credits are certificates awarded to countries that are successful in reducing the emissions that cause global warming.• Major contributors of Greenhouse Gas emissions are cement, steel, textiles, and fertilizer manufacturers.• The major gases emitted are methane, nitrous oxide, hydro fluro carbons, etc which directly deplete the ozone layer.
  3. 3. Contd…• one credit = one tonne of CO2 emission reduced.• Such a credit can be sold in the international market at a prevailing market rate.• The trading can take place in open market.• However there are two exchanges for carbon credit viz Chicago Climate Exchange and the European Climate Exchange.• The mechanisms are Joint Implementation (JI), Clean Development Mechanism (CDM) and International Emission Trading (IET).
  4. 4. • Under JI, a developed country with relatively higher costs of domestic greenhouse reduction set up a project in another developed country a relatively low cost.• Under CDM, a developed country takes a greenhouse gas reduction project activity in a developing country,• The developed country gets credits for meeting its emission reduction targets, while the developing country receives the capital and clean technology to implement the project.• Under IET mechanism, countries trade in the international carbon credit market.• Countries with surplus credits can sell the same to countries with quantified emission limitation and reduction commitments under the Kyoto Protocol.
  5. 5. THE NEXT PHASE• The Sydney Futures Exchange has established a carbon credits trading market and many carbon emitters are buying credits from forest growers.• The largest carbon sink is in the fossil fuels in the ground, but are using them as a major source of energy and emitting CO2 into the atmosphere as a result.• reduced energy demand, increased energy efficiency, using less fossil fuels and more renewable energy sources.• require research and development of sustainable technologies that reduce carbon emissions.• If carbon emissions trading becomes a widespread phenomenon, we will probably see big changes in the Australian countryside.
  6. 6. CARBON EMISSION TRADING• Trading of permits to emit carbon dioxide• 107 million metric tonnes of carbon dioxide equivalent (tCO2e) have been exchanged through projects in 2004,• a 38% increase relative to 2003• The worlds only mandatory carbon trading program is the European Union Emissions Trading Scheme (or EUETS).• a 1997 international treaty that took effect in 2005, it caps the amount of carbon dioxide that can be emitted from large installations, such as power plants and factories.
  7. 7. THE WORKING• A country (or group of countries) caps carbon emissions at a certain level.• Issues permits to firms and industries that grant the firm the right to emit a stated amount of carbon dioxide over a time period.• Firms are then free to trade these credits in a free market.
  8. 8. • A shortage of credits increases the price of credits• Makes it more profitable for firms to engage in carbon reduction.• In this way the desired carbon reductions are met at the lowest cost possible to society.• Firms whose emissions exceed the amount of credits will be heavily penalized.
  9. 9. CONTROVERSIES• Mainly environmental justice NGOs and movements see carbon trading as a proliferation of the free market into public spaces and environmental policy- making.• Failures in accounting, dubious science and destructive impacts of projects upon local peoples and environments as reasons why trading pollution rights should be avoided.• The National Allocation Plans by member governments of the European Union Emission Trading Scheme have been criticized due to some governments issuing more carbon credits than emissions during Phase I of the scheme.
  11. 11. WHAT IS KYOTO PROTOCOL?• United Nations Framework Convention on Climate Change (UNFCCC).• Countries that ratify this protocol commit to reduce• (a) their emissions of carbon dioxide and• (b) five other greenhouse gases, or• (c)engage in emissions trading if they maintain or increase emissions of these gases.
  12. 12. THE PRINCIPLES• Underwritten by governments and is governed by global legislation enacted under the UN’s aegis (protection)• Two General Categories: Developed Countries {ANNEX} Developing Countries {NON – ANNEX 1}• The country that fail target will be penalized.• "flexible mechanisms“.• Financial exchanges like the new EU Emissions Trading Scheme or from projects which reduce emissions in non-Annex 1 economies under the Clean Development Mechanism (CDM)
  13. 13. Contd….• Only CDM Executive Board-accredited Certified Emission Reductions (CER) can be bought and sold in this manner.• The Non-Annex 1 countries have setup Designated National Authorities.• Annex 1 entities want Carbon Credits as cheaply,• whilst Non-Annex 1 entities want to maximize the value of Carbon Credits generated from their domestic GHG Projects.
  14. 14. OBJECTIVES"stabilization of greenhouse gasconcentrations in theatmosphere at a level that wouldprevent dangerousanthropogenic interference withthe climate system.“The Intergovernmental Panelon Climate Change (IPCC)has predicted an average globalrise in temperature of 1.4°C(2.5°F) to 5.8 °C (10.4°F)between 1990 and 2100).
  16. 16. • Kyoto, Japan in December 1997,• Opened for signature on March 16, 1998, and closed on March 15, 1999.• The agreement came into force on February 16, 2005 following ratification by Russia on November 18, 2004.• As of December 2006, a total of 169 countries and other governmental entities have ratified the agreement (representing over 61.6% of emissions from Annex I countries).
  17. 17. Contd… • Exceptions include the United States and Australia. • Countries, like India and China, which have ratified the protocol, are not required to reduce carbon emissions under the present agreement • Of the two conditions, the "55 parties" clause was reached on May 23, 2002 when Iceland ratified. • The ratification by Russia on 18 November 2004 satisfied the "55%" clause and brought the treaty into force, effective February 16, 2005.
  18. 18. DETAILS• According to a press release from the United Nations Environment Programme: – "The Kyoto Protocol is an agreement under which industrialized countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990. – The goal - lower overall emissions of six greenhouse gases - carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, HFCs, and PFCs - calculated as an average over the five-year period of 2008-12. – 8% reductions for the European Union – 7% for the US, – 6% for Japan, – 0% for Russia, – 8% for Australia – 10% for Iceland."
  19. 19. All parties to the UNFCCC can sign or ratify the Kyoto Protocol, whilenon-parties to the UNFCCC cannot.The Kyoto Protocol was adopted at the third session of the Conference ofParties (COP) to the UNFCCC in 1997 in Kyoto, Japan.Most provisions of the Kyoto Protocol apply to developed countries,listed in Annex I to the UNFCCC.
  20. 20. COMMON but DIFFERENTIATED RESPONSIBILITY• The United Nations Framework Convention on Climate Change agreed to a set of a "common but differentiated responsibilities." The parties agreed that:3. The largest share of historical and current global emissions of greenhouse gases has originated in developed countries;2. Per capita emissions in developing countries are still relatively low;3. The share of global emissions originating in developing countries will grow to meet their social and development needs.• In other words, China, India, and other developing countries were exempt from the requirements of the Kyoto Protocol because they were not the main contributors to the greenhouse gas emissions during the industrialization period.