Carbon Credit - Naresh Thakur


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Carbon is an element stored in fossil fuels such as coal and oil

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  • Carbon Credit - Naresh Thakur

    2. 2. Introduction Carbon is an element stored in fossil fuels such as coal and oil. When these fuels are burned, carbon dioxide is released and acts as what we term a "greenhouse gas". Similarly, oxides of Carbon and Nitrogen which are released on account of incomplete combustion also are Green-house gases. Methane or Natural gas liberated is also a green house Gas.
    3. 3. Cont….  The effects of Global warming are well known to humans, including ill effects on all living species of plants and animals and giving rise to the threat of melting of ice bergs in the Sea, which can raise the sea levels in dangerous proportions resulting in flooding & led to climate change.  Considering the global impacts of climate change, the carbon came about in response to the Kyoto Protocol. Signed in Kyoto, Japan, by some 180 countries in December 1997, the Kyoto Protocol calls for around 38 industrialized countries to reduce their greenhouse gas emissions between the years 2008 to 2012 to levels that are 5.2% lower than those of 1990.
    4. 4. What Carbon Credit exactly is?  Carbon credits are reductions of emissions of greenhouse gases caused by a project or a Product utilized by anybody which directly or indirectly reduces or eliminates green house gases. Currently this reduction is measured in terms of Carbon-di-oxide reduced. 1 Carbon Credit = 1 Ton of Carbon Dioxide Reduction  Carbon credits are a basic component of national and international emissions trading schemes that have been implemented to prevent or overcome impact of global warming.
    5. 5. Cont…  They provide a way to reduce greenhouse emissions on an industrial scale by reducing total annual emissions and letting the market assign a monetary value to any shortfall through trading.  Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price.  Credits can be used to finance carbon reduction schemes between trading partners and around the world.
    6. 6. Need of Carbon Credit concept: To reduce the Greenhouse gas emissions by employing measures to reduce the green house gases .  To encourage the countries to put up measures to reduce the green house gases either by decreasing their emissions or by encouraging measures of reducing the green house gases.  To reduce the impact of pollution.
    7. 7. How to Work out?  Kyoto Protocol provides three mechanisms which are supposed to work for the mentioned purpose.  These mechanisms are: 1. Joint Implementation (JI) 2. Clean Development Mechanism (CDM) 3. International Emission Trading (IET).
    8. 8. Cont..  Under Joint Implementation (JI) a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country.  Under the Clean Development Mechanism (CDM) a developed country can ’sponsor’ a greenhouse gas reduction project in a developing country where the cost of greenhouse gas reduction project activities is usually much lower, but the atmospheric effect is globally equivalent.  Under International Emissions Trading (IET) countries can trade in the international carbon credit market to cover their shortfall in allowances.
    9. 9. Early Consideration • Project Idea Note (PIN) Letter of No Objection CDM Project Cycle • Mandatory by your DNA? Generally used for marketing purposes –Setting out project outline, proof of Early consideration • Select / submit project methodology • Takes 12+ months to get approval for new methodology or can use existing methodologies. • Project Design Document (PDD) • Project developer responsible for developing PDD – sets out how project reduces emissions, justifies methodology used, additionality etc. • Host country approval Letter of Approval • Host country has to have a Designated National Authority (DNA) in place. Endorses project and confirms that it is in line with the Sustainable Development aims of that country • Validation • Registration • Validation report submitted to the CDM Executive Board (EB) for registration. Any stakeholders free to comment and request review for ~60 days • Monitoring & Verification • Project Developer responsible for monitoring the project in accordance with protocol set out in PDD. DOE responsible for verifying this report and submitting to EB • CER Issuance • EB reviews verification report and issues CER’s assuming that all is in order • Independent Designated Operational Entity (DOE) reviews PDD, confirms it is accurate & meth. chosen is applicable
    10. 10. Buying Carbon Credits = Reduction in emissions………..How???  Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air.   This means that carbon becomes a cost of business and is seen like other inputs such as raw materials or labor.
    11. 11. Sectors in which Carbon Credits can work
    12. 12. Facts Regarding Carbon Credits Benefits: (1) Contribution towards the fight against Global warming.  (2) Improve the return on investments in Projects.  (3) Boost the economic feasibility of projects.  (4) Accelerate project implementation.  (5) Provide an additional source of revenue.
    13. 13. Criticism  As several countries responsible for a large proportion of global emissions (notably USA, Australia, China and India) have avoided mandatory caps.  Governments of capped countries may seek to unilaterally weaken their commitments.  The grandfathering of allowances.  Establishing a meaningful offset project is complex  The validation of the effectiveness of some projects.
    14. 14. Thank You