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1
Carbon
Trading &
Future
2
Flow of Presentation
What is
Carbon
Credit?
Calculation of
Carbon Credit
Present
Scenario of
GHG
Emission
Implication of
Carbon Credit
on Indian
Agriculture
Kyoto
Protocol
Carbon
Market
Companies
dealing in
carbon
marketing
Carbon Credit
3
A carbon credit is a
tradable permit
provides the holder
of the credit the right
to emit one ton of
carbon dioxide or an
equivalent of another
greenhouse gas.
The main goal of
carbon credits is the
reduction of
emissions of carbon
dioxide and other
greenhouse gases
from industrial
activities to reduce
the effects of global
warming.
Companies or
nations are allotted
a certain number of
credits and may
trade them to help
balance total
worldwide
emissions and
reduce their Carbon
Footprint.
How to calculate Carbon Credit
• Each ton of dry tree (biomass)
weight = 1 ton of carbon.
• It is estimated that 1 ton carbon
produce 3.67 tons of Carbon
dioxide.
• 1 ton of Carbon dioxide not
released in atmosphere = 1 Carbon
Credit.
Source: International Journal of Low Carbon Technologies, Volume 9
4
5
Present Scenario of GHG Emission
https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data
Total
Green
House Gas
emission
reached to
36.3 billion
tonnes
Global
Green
House Gas
emission
rose by 6%
in 2021 and
reached
to 36.3
billion
tonnes.
5
Source:www.statista.com
Total Green House Gas emitted by
India reached to 254.1 million tonnes
with the increase of 7.3%
37%
21%
17%
9%
5%
2%
8%
Share of GHG emission in India
Electricity Agriculture Manufacturing
Transport Industrial Processes Fuel Combustion
Others
Activities eligible for carbon credit
Carbon Farming
Bio-methanation
power generation
Afforestation and
reforestation
Controlled
combustion
Solar Energy
7
Carbon Credit: Implication on Indian
Agriculture
8
Improvement in soil health is the indirect benefit that farmer can avail
Monetising this soil carbon directly benefit the farmers as 1 tonne carbon credit equals to INR 780.
Improvement of soil health leads to increase soil carbon which enhance carbon credit
Insecticides and Pesticides depleted soil carbon level
Agriculture is impacted by climatic crises
55% Indian population depend on agriculture
Source: idronline.org, Article by- Ravi Trivedi
9
Indian policy on Carbon Credit
These markets helps the Indian company to trade globally and act as drivers of reducing emission.
The Government is set to launch domestic carbon market to fulfil the demand.
The share of green energy up to 50% from current 42% by 2030.
Goal to reduce 1 billion tonnes of carbon by 2030 and achieving net-zero by 2070.
In August, 2022, India ban the export of carbon credits.
Source: www.investindia.gov.in
Kyoto Protocol
10
The United Nations' Intergovernmental Panel on Climate Change (IPCC) developed a carbon
credit proposal to reduce worldwide carbon emissions in a 1997 agreement known as the Kyoto
Protocol.
Three mechanism have been made through which countries can acquire carbon credit:
 Joint Implementation
 Clean Development Mechanism
 International Emission Trading
www.compoundchem.com
…continued
11
Emission Trading :
A country can acquire emission units from
another country for meeting a part of their
emission reduction target.
Joint Implementation :
Country A and Country B may take part in an
emission reduction project and count the
resulting emission units towards its target.
Lack of Carbon
Credits
Buy Carbon Credits
Money invested in
CDM Project
Carbon Emission is
reduced because of
CDM Project
Investment
Clean Development Mechanism :
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.
12
The COP26 Agreement
To keep global temperature
increases below 2°C
There will be a national plan
for the assessment of carbon
emission
Countries submitted the plan to
reduce GHG to 2025
$ 100 billion a year in climate finance
for developing countries
Developed counties to absolute
reduction in carbon emission
Countries should reach global peaking
of GHG emission as soon as possible
Source: UNEP, Global Trends in Renewable Energy
13
Types of Carbon Credit Markets
Compliance
Market
Voluntary
Market
Clean
Development
Mechanism
(CDM)
Corporate
Social
Responsibility
&
Public
Relations
14
Who are the typical buyers and sellers?
Example: Companies like
Google, Amazon and Apple
have vowed to go ‘net zero’
Since it is impossible to fully stop greenhouse
gas emissions or absorb them back, they keep
their promise by buying carbon credits.
The buyers are typically
companies, governments,
municipalities or any
other organizations
The sellers could be
anybody who saves CO2
Example: Waste disposal
units,plantation companies, can
sell the carbon credits
15
Companies dealing with carbon credits
Tesla’s one of the reason for turning profit by selling
carbon emissions credits to other manufactures
In 2021, the company made $354 M (3% of revenue) from
selling carbon credits
International players :
16
Companies dealing with Carbon Credits in India
Indore-based Enking International
Indore-based Enking International may
become the world’s first company that
operates in the carbon markets space to
go in for an initial public offering (IPO).
Handia Forest in Madhya Pradesh
In Madhya Pradesh, it is estimated that
95 very poor rural villages would
jointly earn at least US$300,000 every
year from carbon payments by restoring
10,000 hectares of degraded community
forests.
Jindal Vijaynagar Steel
It has recently declared that by the
next 10 years it will be ready to sell
$225 million worth of saved carbon by
uses the Corex furnace technology
which prevents 15 million tonnes of
carbon from being discharged.
Powerguda in Telangana
The village in Telangana was selling 147
tonnes equivalent of saved carbon dioxide
credits. This was done by extracting bio-
diesel from 4500 Pongamia trees in their
village.
Source: Legal Service India( Article by Gautam1)
17
Role of India
Indian companies are expected to corner at least 10 % of the global market.
India is expected to rake in $ 100 million annually by trading in carbon credits.
India is the world’s 3rd largest emitter of carbon dioxide with its present share in
global emissions estimated at 7 %.
It will contribute to the vision of green house gas reduction by adopting
alternative source of energy.
18
Advantages of
Carbon Credit
Technology transfer
Country's financial
growth
Development of
cleaner technologies
Environmental
benefits
Investment option
Developing extra
income
Disadvantages of
Carbon Credit
Not being properly
regulated
Industries in the some
nations are purchasing legal
rights to pollute the
atmosphere.
Industries are purchasing more
allowances rather than implementing
greener technologies.
Carbon reduction at one
place and carbon emission at
some other place.
19
What factors prevented the carbon markets from evolving?
There were three major issues relating to the carbon market :
01
Green Washing
03
Human Rights Abuses
02
Double-Counting
Double counting refers
to a situation where two
parties claim the same
carbon removal or
emission reduction
Under greenwashing
companies falsely
market their green
credentials.
E.g. Misrepresentation
of Carbon-Neutral
products.
Global climate markets
raise critical questions
about justice since they
tend to benefit the
countries that are most
industrialized.
20
How To Invest in Carbon Credits ?
Carbon-Credit ETFs
An exchange traded fund (ETF) is a low-risk pooled of securities. A carbon-credit ETF tracks regulations of
the carbon market.
E.g. The KraneShares Global Carbon Strategy ETF (KRBN) is largest ETFs with $ 705.17 million in FY
2020-21 which tracks carbon-credit futures contracts.
Carbon-Credit Futures Contract
Carbon Credit can also be traded in future market. A future contract is a type of derivative in which two
parties agree to trade a specific asset at a specific future date for a specific price agreed today.
Individual Companies
This is indirectly invest in carbon credits by investing in companies that trade them.
E.g. Microsoft has announced its goal of becoming “carbon negative” by 2030, and as a part of that effort,
contracted 1.3 million carbon offset credits for 2021.
Source: “Carbon credits investments” Article by- Laurel Tincher
21
Future of Carbon Credits
o Climate Change is potentially the biggest challenge.
o While carbon trading is not only the solution to climate
change, But it is a mechanism that allows industry to
mobilize its existing resources into greener and more
environmentally friendly technologies.
o Within the next 10 to 20 years carbon is likely to be the most
traded commodity in the world.
o According to International Emissions Trading Association,
carbon prices in compliance market touch to $ 67 per metric
ton by 2030.
22
The voluntary carbon market could grow up
to 25-fold by 2050.
The annual global demand for carbon credits
could reach up to 1.5 to 2 billion metric tons
of carbon dioxide by 2030 and up to 7 to 13
billion metric tons by mid-century.
Total 1,565 companies with $12.5 trillion in
revenue have set net-zero targets by 2030.
Source: Article by Dorothy Neufeld
23

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Carbon Credit Carbon Trading Future.pptx

  • 1. 1
  • 2. Carbon Trading & Future 2 Flow of Presentation What is Carbon Credit? Calculation of Carbon Credit Present Scenario of GHG Emission Implication of Carbon Credit on Indian Agriculture Kyoto Protocol Carbon Market Companies dealing in carbon marketing
  • 3. Carbon Credit 3 A carbon credit is a tradable permit provides the holder of the credit the right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas. The main goal of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming. Companies or nations are allotted a certain number of credits and may trade them to help balance total worldwide emissions and reduce their Carbon Footprint.
  • 4. How to calculate Carbon Credit • Each ton of dry tree (biomass) weight = 1 ton of carbon. • It is estimated that 1 ton carbon produce 3.67 tons of Carbon dioxide. • 1 ton of Carbon dioxide not released in atmosphere = 1 Carbon Credit. Source: International Journal of Low Carbon Technologies, Volume 9 4
  • 5. 5 Present Scenario of GHG Emission https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data Total Green House Gas emission reached to 36.3 billion tonnes Global Green House Gas emission rose by 6% in 2021 and reached to 36.3 billion tonnes.
  • 6. 5 Source:www.statista.com Total Green House Gas emitted by India reached to 254.1 million tonnes with the increase of 7.3% 37% 21% 17% 9% 5% 2% 8% Share of GHG emission in India Electricity Agriculture Manufacturing Transport Industrial Processes Fuel Combustion Others
  • 7. Activities eligible for carbon credit Carbon Farming Bio-methanation power generation Afforestation and reforestation Controlled combustion Solar Energy 7
  • 8. Carbon Credit: Implication on Indian Agriculture 8 Improvement in soil health is the indirect benefit that farmer can avail Monetising this soil carbon directly benefit the farmers as 1 tonne carbon credit equals to INR 780. Improvement of soil health leads to increase soil carbon which enhance carbon credit Insecticides and Pesticides depleted soil carbon level Agriculture is impacted by climatic crises 55% Indian population depend on agriculture Source: idronline.org, Article by- Ravi Trivedi
  • 9. 9 Indian policy on Carbon Credit These markets helps the Indian company to trade globally and act as drivers of reducing emission. The Government is set to launch domestic carbon market to fulfil the demand. The share of green energy up to 50% from current 42% by 2030. Goal to reduce 1 billion tonnes of carbon by 2030 and achieving net-zero by 2070. In August, 2022, India ban the export of carbon credits. Source: www.investindia.gov.in
  • 10. Kyoto Protocol 10 The United Nations' Intergovernmental Panel on Climate Change (IPCC) developed a carbon credit proposal to reduce worldwide carbon emissions in a 1997 agreement known as the Kyoto Protocol. Three mechanism have been made through which countries can acquire carbon credit:  Joint Implementation  Clean Development Mechanism  International Emission Trading www.compoundchem.com
  • 11. …continued 11 Emission Trading : A country can acquire emission units from another country for meeting a part of their emission reduction target. Joint Implementation : Country A and Country B may take part in an emission reduction project and count the resulting emission units towards its target. Lack of Carbon Credits Buy Carbon Credits Money invested in CDM Project Carbon Emission is reduced because of CDM Project Investment Clean Development Mechanism : 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.
  • 12. 12 The COP26 Agreement To keep global temperature increases below 2°C There will be a national plan for the assessment of carbon emission Countries submitted the plan to reduce GHG to 2025 $ 100 billion a year in climate finance for developing countries Developed counties to absolute reduction in carbon emission Countries should reach global peaking of GHG emission as soon as possible Source: UNEP, Global Trends in Renewable Energy
  • 13. 13 Types of Carbon Credit Markets Compliance Market Voluntary Market Clean Development Mechanism (CDM) Corporate Social Responsibility & Public Relations
  • 14. 14 Who are the typical buyers and sellers? Example: Companies like Google, Amazon and Apple have vowed to go ‘net zero’ Since it is impossible to fully stop greenhouse gas emissions or absorb them back, they keep their promise by buying carbon credits. The buyers are typically companies, governments, municipalities or any other organizations The sellers could be anybody who saves CO2 Example: Waste disposal units,plantation companies, can sell the carbon credits
  • 15. 15 Companies dealing with carbon credits Tesla’s one of the reason for turning profit by selling carbon emissions credits to other manufactures In 2021, the company made $354 M (3% of revenue) from selling carbon credits International players :
  • 16. 16 Companies dealing with Carbon Credits in India Indore-based Enking International Indore-based Enking International may become the world’s first company that operates in the carbon markets space to go in for an initial public offering (IPO). Handia Forest in Madhya Pradesh In Madhya Pradesh, it is estimated that 95 very poor rural villages would jointly earn at least US$300,000 every year from carbon payments by restoring 10,000 hectares of degraded community forests. Jindal Vijaynagar Steel It has recently declared that by the next 10 years it will be ready to sell $225 million worth of saved carbon by uses the Corex furnace technology which prevents 15 million tonnes of carbon from being discharged. Powerguda in Telangana The village in Telangana was selling 147 tonnes equivalent of saved carbon dioxide credits. This was done by extracting bio- diesel from 4500 Pongamia trees in their village. Source: Legal Service India( Article by Gautam1)
  • 17. 17 Role of India Indian companies are expected to corner at least 10 % of the global market. India is expected to rake in $ 100 million annually by trading in carbon credits. India is the world’s 3rd largest emitter of carbon dioxide with its present share in global emissions estimated at 7 %. It will contribute to the vision of green house gas reduction by adopting alternative source of energy.
  • 18. 18 Advantages of Carbon Credit Technology transfer Country's financial growth Development of cleaner technologies Environmental benefits Investment option Developing extra income Disadvantages of Carbon Credit Not being properly regulated Industries in the some nations are purchasing legal rights to pollute the atmosphere. Industries are purchasing more allowances rather than implementing greener technologies. Carbon reduction at one place and carbon emission at some other place.
  • 19. 19 What factors prevented the carbon markets from evolving? There were three major issues relating to the carbon market : 01 Green Washing 03 Human Rights Abuses 02 Double-Counting Double counting refers to a situation where two parties claim the same carbon removal or emission reduction Under greenwashing companies falsely market their green credentials. E.g. Misrepresentation of Carbon-Neutral products. Global climate markets raise critical questions about justice since they tend to benefit the countries that are most industrialized.
  • 20. 20 How To Invest in Carbon Credits ? Carbon-Credit ETFs An exchange traded fund (ETF) is a low-risk pooled of securities. A carbon-credit ETF tracks regulations of the carbon market. E.g. The KraneShares Global Carbon Strategy ETF (KRBN) is largest ETFs with $ 705.17 million in FY 2020-21 which tracks carbon-credit futures contracts. Carbon-Credit Futures Contract Carbon Credit can also be traded in future market. A future contract is a type of derivative in which two parties agree to trade a specific asset at a specific future date for a specific price agreed today. Individual Companies This is indirectly invest in carbon credits by investing in companies that trade them. E.g. Microsoft has announced its goal of becoming “carbon negative” by 2030, and as a part of that effort, contracted 1.3 million carbon offset credits for 2021. Source: “Carbon credits investments” Article by- Laurel Tincher
  • 21. 21 Future of Carbon Credits o Climate Change is potentially the biggest challenge. o While carbon trading is not only the solution to climate change, But it is a mechanism that allows industry to mobilize its existing resources into greener and more environmentally friendly technologies. o Within the next 10 to 20 years carbon is likely to be the most traded commodity in the world. o According to International Emissions Trading Association, carbon prices in compliance market touch to $ 67 per metric ton by 2030.
  • 22. 22 The voluntary carbon market could grow up to 25-fold by 2050. The annual global demand for carbon credits could reach up to 1.5 to 2 billion metric tons of carbon dioxide by 2030 and up to 7 to 13 billion metric tons by mid-century. Total 1,565 companies with $12.5 trillion in revenue have set net-zero targets by 2030. Source: Article by Dorothy Neufeld
  • 23. 23