The document discusses carbon credits, which represent one ton of CO2 or equivalent greenhouse gas, regulated under the UNFCCC. It outlines the commitments of Annex I and non-Annex I countries under the Kyoto Protocol and highlights the carbon trading market, especially focusing on India's role in emissions trading and generation of carbon credits. Factors affecting carbon credit prices, including supply-demand dynamics and global economic conditions, are also examined.

1. CARBON CREDITS & ITS TRADING Prepared By: Jatin Shah Pratik Jariwala

3. Contributors to CO 2 !

5. CARBON CREDIT 1 CARBON CREDIT ≈ 1 ton of CO 2 or its equivalent greenhouse gas (GHG) which is an entitled certificate by UNFCCC.

6. United Nations Framework Convention on Climate Change Act signed by 165 nations in 1992 at Rio de Janeiro. Annex 1 & Non-Annex 1 countries. Annex 1 (developed countries) agreed to reduce their GHGs by 5.2% below 1990 levels in 1 st commitment period 2008 – 2012.

7. KYOTO Protocol Annex I Non-Annex I Not ratifie d

8. Non -Annex-1 India Bangladesh Brazil China Afghanistan Algeria Nepal Argentina Bolivia Srilanka Pakistan Malaysia Mauritius Annex I Australia(Not ratified) Austria Belgium Monaco Canada Netherland New zealand United Kingdom Germany Spain Switzerland Greece

9. from

10. Price Influencing Factors Supply-demand mismtch Policy issues Crude oil prices Coal prices CO2 emissions European Union Allowances (EUAs) prices Foreign exchange fluctuations Global economic growth

11. An Example.. British Petroleum in UK emitting more than the accepted norms of UNFCCC. Tie up with a subsidiary in India or China under CDM. The credits arising out of the use of the new technology are sold to counterparts in Europe. Thus a carbon credit market is created.

12. INDIAN SCENARIO INDIAN SCENARIO

13. Conditions In INDIA No fixed norms of emission reduction by government. Potential Participants Registry

14. India’s Potential India – Non Annex I country, has a large scope in emissions trading. India and China together contribute to $5 billion of the global carbon trade estimated at $30billion. One of the leading generators of CERs through CDM.

15. Hedging The Price Risk – An Example

16. Carbon Credit Traders In India Andhyodaya Green Energy Grasim Industries Ltd . Indo Gulf Fertilizers Indus Technical & Financial Consultants Ltd Madhya Pradesh Rural Livelihoods Project Rajasthan Renewable Energy Corporation Reliance Energy Ltd. Tata Motors Limited Tata Steel Limited Bajaj Finserv Limited Dhariwal Industries Ltd Tata Power Company Limited BlueStar Energy Services Inc. Valera Global Inc.

17. Suppose ABC Co. wants to buy carbon credits at the end of year 2008. The current price is Rs.1300 per ton and it expects the prices to up Rs.1400 per ton .To save itself from such Rs.1500 ton increase in price, the company decides to hedge on exchange platform. A COMPANY ABC CO.

23. THANK YOU THANK YOU