carbon credit


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  • Scientists first discovered acid rain in 1852, when the English chemist Robert Agnus invented the term. It is caused by airborne acidic pollutants and has highly destructive results. From then until now, acid rain has been an issue of intense debate among scientists and policy makers.
  • The major distinction between the Protocol and the Convention is that while the Convention encouraged industrialized countries to stabilize GHG emissions, the Protocol commits them to do so.
  • They are : CO2, Methane, Nitrous Oxide, Hydroflourocarbon, Sulphur Hexaflouride, Perflourocarbon
  • allows developed (or Annex 1) nations to receive emission credits towards their own emission targets by participating in certain projects in developing (or Non-annex 1) countries. These Clean Development projects must be approved by members of the Protocol and must contribute to sustainable development and greenhouse gas emission reductions in the host developing country.
  • allows Annex 1 nations to receive emission credits towards their own emission targets by participating in certain projects with other Annex 1 nations. These Joint Implementation projects must be approved by all nations participating in the project, and must either reduce greenhouse gas emissions or contribute to enhanced greenhouse gas removal through emission sinks (i.e. reforestation).
  • allows Annex 1 nations to purchase emission ‘credits’ from other Annex 1 countries. Some countries will be below the emission targets assigned to them under the Protocol and, as such, will have spare emission credits. Under the emissions trading system, other nations may purchase these spare credits and use them towards their own emission targets.
  • carbon credit

    2. 2.  Global Warming and Climate Change Deforestation Energy Crisis Ozone Layer Depletion Pollution Waste Oil Spills Overpopulation Nuclear Issues JITHIN KRISHNAN 2
    3. 3.  ACID RAIIN Carbon Credit Definition UNFCC KYOTO PROTOCOL Carbon credit(s)  Mechanism  Pricing  Avenues for Earning  Importance  Indian Scenario JITHIN KRISHNAN 3
    6. 6.  Refers to what scientists call acid deposition. Caused by airborne acidic pollutants and has highly destructive results. One of the most important environmental problems of all, cannot be seen. The invisible gases that cause acid rain usually come from automobiles or coal-burning power plants. Moves easily, affecting locations far beyond those that let out the pollution. Can have harmful effects on plants, aquatic animals, and infrastructure through the process of wet deposition. JITHIN KRISHNAN 6
    7. 7. A carbon credit is a financial instrument that represents a tonne of CO2 or CO2e (carbon dioxide equivalent gases) removed or reduced from the atmosphere from an emission reduction project. Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one ton of carbon dioxide reduction. Such a credit can be sold in the international market at a prevailing market rate. JITHIN KRISHNAN 7
    8. 8. 1 CARBON CREDIT ≈ 1 ton of CO2 or its equivalentgreenhouse gas(GHG) which is an entitledcertificate by UNFCCC(United Nations FrameworkConvention on Climate Change) JITHIN KRISHNAN 8
    9. 9. A credit for reducing 1 ton ofCO2 (Green House Gases) from the atmosphere
    10. 10.  Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air. Emissions become an internal cost of doing business and are visible on the balance sheet alongside raw materials and other liabilities or assets. JITHIN KRISHNAN 10
    11. 11. Birth of UNFCCC In 1992, Rio BrazilObjective…Green House Gases should be stabilizedwithin a time frame. JITHIN KRISHNAN 11
    12. 12.  165 nations signed the 1992 United Nations Framework Convention on Climate Change (UNFCCC) at Rio de Janeiro The Convention divides countries into two main groups - Annex I & Non-Annex I Countries Annex I (developed countries) agreed to reduce their GHGs by 5.2 % below 1990 levels in 1st commitment period 2008 – 2012 JITHIN KRISHNAN 12
    13. 13.  Convention is based on three principles – Common but differentiated responsibility – Precautionary approach – Sustainable Economic Growth and Development JITHIN KRISHNAN 13
    14. 14. The KYOTO PROTOCOL…An agreement negotiated in 11December 1997 in Kyoto, Japan JITHIN KRISHNAN 14
    15. 15. The Kyoto Protocol…… Objective Reduction of Green House Gasesemission by developed countries in the The First Commitment Period (2008-2012) JITHIN KRISHNAN 15
    16. 16.  The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change(UNFCCC) passed on 11 December 1997 in Kyoto, Japan but came in force on 16 February, 2005. 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. JITHIN KRISHNAN 16
    17. 17.  It sets legally binding targets for emissions of 6 major greenhouse gases in industrialized countries and defines a specific time period for reaching those targets. It creates a new commodity (carbon) that can be traded through new international market-based mechanisms. It will facilitate the initials of sustainable development while providing additional support to developing nations to achieve this goal. JITHIN KRISHNAN 17
    18. 18. KYOTO ProtocolAnnex INon-Annex INot ratified JITHIN KRISHNAN 18
    19. 19. Annex I Non -Annex-1Australia(Not ratified) IndiaAustria BangladeshBelgium BrazilMonaco ChinaCanada AfghanistanNetherland AlgeriaNew Zealand NepalUnited Kingdom ArgentinaGermany BoliviaSpain SrilankaSwitzerland PakistanGreece Malaysia JITHIN KRISHNAN Mauritius 19
    20. 20.  Clean Development Mechanism (CDM) Joint Implementation Emissions Trading JITHIN KRISHNAN 20
    21. 21. Clean Development Mechanism (CDM) Sets a projectDeveloped Developin country g Country(needs CC) Earns carbon Sells carbon credits credits called Certified Emission Reduction JITHIN KRISHNAN 21
    22. 22. Joint Implementation Sets a project Developed Developed country A country B (needs CC) Earns carbon Sell carbon credits called credits Emission Reduction Units JITHIN KRISHNAN 25
    23. 23. Emission Trading Payment for CC Developed country A Developed (needs CC) country B Earns carbon credits Sell these called carbon credits Assigned Amount Units JITHIN KRISHNAN 26
    24. 24. Currently there are 5 EnvironmentalExchanges, trading in Carbon Credits EUROPEAN CLIMATE EXCHANGE POWER NEXT JITHIN KRISHNAN 27
    25. 25.  Risk allocation Creditworthiness & experience of project sponsor Viability of underlying project Contract structure (e.g. upfront payments incur discount, penalties for non- delivery, ability to pay penalties) Cost of validation & potential certification Host country support & willingness to cooperate Additional environment and social benefits JITHIN KRISHNAN 28
    26. 26.  The amount of carbon dioxide equivalent (CO2e) being traded globally in 2009 would value at USD 157 billion. The global carbon market that has been growing by 105 per cent and 84 per cent in 2007 and 2008 respectively. India is expected to be one of the top three largest players in the Carbon Credits market by 2010 end where business is estimated to grow by US$ 5 billion. The average annual Certified Emission Reduction (CERs) from registered projects during July 2008 to February 2009 grew by 20.92 per cent from 218,345,930 to 264,022,976 respectively. $ 60 Billion was the size of the global carbon credit market in 2007. JITHIN KRISHNAN 29
    27. 27.  The average price paid to offset one ton of CO2 or equivalent GHGs rose 49% from 2006 to 2007. The percentage of projects sourced from Asia nearly doubled, from 22% in 2006 to 39% in 2007. More than 3.6 million CER’s registered. Of the 93 CDM projects registered, 23 are from India. Almost 50% of projects in the pipeline are from India. Over 75% of India’s CDM potential lies in the energy sector. By 2012 Indian companies are expected to generate at least US$ 8.5 billion JITHIN KRISHNAN 30
    28. 28. India’s Stance in Carbon Credits JITHIN KRISHNAN 31
    29. 29. India along with China, lead countries in earning Carbon Credit JITHIN KRISHNAN 32
    30. 30. India pocketed Rs 1,500 crores in the year 2005 just by selling carbon credits to developed- country clients.India has generated 30 millionCarbon credits & 140 millionare in pipeline JITHIN KRISHNAN 33
    31. 31.  Fastest growing financial market – rose 80% in 2007 to reach nearly $ 60 billion - expected to be $ 1 trillion by 2009–10. 2007 carbon market shows China’s share at 61% and India at 12%. In terms of total CERs issued of 166 million, India has 43 million or 26%. In 2008, China’s share at 23% and India at 30% in terms of no of projects and 36% and 25% in terms of no of CER’s issued respectively. (13.10.08) An Indian firm, J.S.W Steel won the largest single CER of 5.4 million in 2 projects. JITHIN KRISHNAN 34
    32. 32. • Sector-wise break-up No. of Projects 22% Energy Efficiency 29% Forestry Fuel switching Industrial Process MSW 5% 1% Renewable Renewable (Biomass) 35% 6% 2% Total No. of Projects = 1578 JITHIN KRISHNAN 35
    33. 33. CERs up to 2012 14% Energy Efficiency 34% Forestry Fuel switching20% Industrial Process MSW Renewable Renewable (Biomass)2% 2% 10% 18% Total No. of CERs = 633401547.39 JITHIN KRISHNAN 36
    34. 34.  Multi Commodity Exchange of India Ltd. ( MCX) entered into a strategic alliance with CCX in September 2005 to initiate carbon trading in India. The tie-up would provide immense scope and opportunity for domestic suppliers to realize better prices for their carbon credits. India being a major supplier of carbon credits, the tie-up between the two exchanges is expected to ensure better price discovery of carbon credits JITHIN KRISHNAN 37
    36. 36.  Andhyodaya Green  Reliance Energy Ltd. Energy  Tata Motors Limited Grasim Industries Ltd.  Tata Steel Limited Indo Gulf Fertilizers  Bajaj Finserv Limited Indus Technical &  Dhariwal Industries Financial Consultants Ltd Ltd  Tata Power Company Madhya Pradesh Rural Limited Livelihoods Project  BlueStar Energy Rajasthan Renewable Services Inc. Energy Corporation  Valera Global Inc. JITHIN KRISHNAN 39
    37. 37.  CC provide an additional source of revenue; CC improves the return on their investments; CC boost the economic feasibility of projects; CC accelerate project implementation. JITHIN KRISHNAN 40
    38. 38. JITHIN KRISHNAN 41
    39. 39. JITHIN KRISHNAN 42