Carbon credit

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Carbon credit

  1. 1. CARBON CREDIT By: ANJANI Kr. YADAV RAJAN MANTRI
  2. 2. Concept of Carb Birth of Carbon Credit Growth of Carbon Credit Position India’s
  3. 3. The Major Concern… GLOBAL WARMING
  4. 4. Green house gases leading to Global Warming CO 2 Methane Nitrous Oxide Hydroflourocarbon Sulphur Hexaflouride Perflourocarbon CO2t-e…… one tonne of CO2 equivalent
  5. 5. Birth of UNFCCC In 1992, Rio Brazil Objective… Green House Gases should be stabilized within a time frame.
  6. 6. The KYOTO PROTOCOL… An agreement signed in December 1997 in Kyoto, Japan
  7. 7. KYOTO PROTOCOL • Protocol adopted under the UNFCCC( United Nations Framework • • • • Convention on Climate Change) in 1997, and came into effect in 2005. Countries were segregated into 3 categories- Annex I, Annex II and NonAnnex I. Annex I comprises of 41 countries, industrialized countries and economies in transition. The target specified is to reduce GHG emission from 1990 level by 5.8%. Annex II comprises of 21 countries which are a subset of Annex I part of OECD(Organization for Economic Co-operation and Development). They have additional targets of reducing GHG emissions in developing countries. Non Annex I comprises of 145 countries, which don’t have any target specific goals according to the Protocol, but have to decrease the carbon emissions.
  8. 8.  A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another green house gas equivalent to one tonne of carbon.   The goal is to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions or less carbon intensive approaches than those used when there is no cost to emitting carbon dioxide and other GHGs into the atmosphere. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world.  Carbon credits differ from carbon allowances although the term carbon credit is interchangeably used to represent both
  9. 9. Carbon credit Carbon Taxes price may be more likely to be perceived as fair by those paying it. complex, expensive, and time-consuming to implement. help to ensure that all investment goes into genuine sustainable carbon reduction schemes. Chances of cheating if correctly implemented a target level of emission reductions may be achieved with more certainty. the actual emissions might vary over time provide a framework for rewarding allows for more centralized handling of acquired gains worth of carbon is stabilized by government regulation relative disadvantage to new or growing companies.
  10. 10. The Kyoto Protocol…… Objective Reduction of Green House Gases emission by developed countries in the The First Commitment Period (2008-2012)
  11. 11. Contribution to GHGs WH Y
  12. 12. What is Carbon Credit under the KYOTO Protocol… A credit for reducing 1 ton of CO 2 (Green House Gases) from the atmosphere
  13. 13. How to generate Carbon Credits??? CARBON CREDITS
  14. 14. CO 2 ETHANE M METHANE EARN CARBON CREDIT METHANE CO 2
  15. 15. USE OF CARBON CREDITS IN EMISSION REDUCTION
  16. 16. REDUCTIO N NATIONAL MEASURES ADDITIONAL MEASURES THE FLEXIBILITY MECHANISM
  17. 17. FLEXIBILITY MECHANISM Emissio n trading Joint implementation Clean development Mechanism Project based
  18. 18. International Emissions Trading Market based approach used to attach a price to emitting GHG’s. Also called the Cap-and-Trade method. Cap - Central Authority sets the cap or limit on the total amount of emission that can be done based on the commitment in Kyoto Protocol. Trade - Firms can only release GHG’s equivalent to the amount of carbon credits in their possession. Exceeding the limit leads to carbon tax/penalties
  19. 19. Emission Trading Develope Develope d country d country A A (needs (needs CC) CC) Payment for CC Sell these carbon credits Develop Develop ed ed country country B B Earns carbon credits called Assigned Amount Units
  20. 20. JOINT IMPLEMENTATION  The mechanism known as “joint implementation,” defined in Article 6 of the Kyoto Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex I Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project in another Annex I Party, each equivalent to one tonne of CO2, which can be counted towards meeting its Kyoto target.  Under Joint Implementation, countries with commitments under the Kyoto Protocol are eligible to transfer and/or acquire emission reduction units (ERUs) and use them to meet part of their emission reduction target.
  21. 21. Joint Implementation Sets a project Develope Develope d country d country A A (needs (needs CC) CC) Sell carbon credits Develope Develope d country d country B B Earns carbon credits called Emission Reduction Units
  22. 22. CDM According to the UNFCCC, “The clean development mechanism defined in Article 12 of the Protocol allows a country with emission limitation commitment to implement an emission-reduction project in developing countries.” There is no transfer of carbon credits from one entity to another. There is only creation of new carbon credits.
  23. 23. Clean Development Mechanism (CDM) Develope Develope d country d country (needs (needs CC) CC) Sets a project Sells carbon credits Developing Developing Country Country Earns carbon credits called Certified Emission Reduction
  24. 24. Economics of CDM Advantages: Sustainable development in host country Contribution to technology transfer Contribution to financial flow Improve cost effectiveness of GHG mitigation in developed countries. Help reduce carbon leakage of emissions
  25. 25. Concept of VER’s Countries not committed to the protocol Voluntary Emission Reduction OR Verified Emission reduction VER
  26. 26. of What should be the price carbon???? The price of the carbon credits is set by the principles of demand and supply. The government slowly reduces the number of carbon credits in the market, increasing their prices and making it more feasible to reduce GHG’s than to buy carbon credits. At present, price of 1 carbon credit is 10 Euro to 15 Euro
  27. 27. Market for Carbon Trading…… Currently there are 5 Environmental Exchanges, trading in Carbon Credits EUROPEAN CLIMATE EXCHANGE POWER NEXT
  28. 28. India’s Stance in Carbon Credits
  29. 29. India and the Kyoto Protocol India is a Non Annex I country. As of Sept 2012, it hosts 29.5% of CDM According to the Planning Commission Report, the total CO2 emission in 1990 was 10,01,352 Gg-Giga gm Various projects are estimated to produce about 306 million CERs.
  30. 30.  India’s contribution to carbon credits stands at $1 billion, out of a global trading of about $5 billion. India has generated about 30 million carbon credits and has a line-up of about 140 million to introduce into the global market. These comprise chemical units, plantation companies, municipal corporations and waste disposal units that can easily sell their carbon credits for good amounts of money.
  31. 31. India along with China, lead countries in earning Carbon Credit
  32. 32. India pocketed Rs crores in 1,500 the year 2005 just by selling carbon credits to developedcountry clients. India has generated 30 million Carbon credits & 140 million are in pipeline
  33. 33. Some of the Leading companies of India using & selling Carbon Credits… GUJARAT FLOUROCARBONS Ltd.
  34. 34. Adani Power managed to reduce GHG emissions by 1.8 million CERS in the Mundra Project in Gujarat. So it sold the excess carbon credits, getting about 600 crores from the transaction.
  35. 35. SRF… . The major beneficiary of reducing GHG’s
  36. 36. What after 2012… End of Commitment Period??? 2009 UNFCCC – Copenhagen  No firm promises made, agreement to halve carbon emissions by 2050.  Acknowledged Copenhagen Accord to keep temperature rise below 2°C. 2011 UNFCCC – Durban  Agreement to make a legally binding deal by 2015 coming into effect by 2020.  Development of Green Climate Fund to distribute $100 billion to poorer countries to fight climate change.
  37. 37. Thank You……
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