SlideShare a Scribd company logo
CARBON CREDITS
“Climate change is the defining
    challenge of our age.”
  Ban Ki-moon, CMP 3, Bali, Indonesia
BACKGROUND
The burning of fossil fuels is a major source of greenhouse gas
emissions, especially for power, cement, steel, textile, fertilizer
and many other industries which rely on fossil fuels (coal,
electricity derived from coal, natural gas and oil).

The major greenhouse gases emitted by these industries are
carbon dioxide, methane, nitrous oxide, hydrofluorocarbons
(HFCs), etc., all of which increase the atmosphere's ability to
trap infrared energy and thus affect the climate.

The concept of carbon credits came into existence as a result of
increasing awareness of the need for controlling emissions.

The mechanism was formalized in the Kyoto Protocol, an
international agreement between more than 170 countries.
KYOTO PROTOCOL
The Kyoto Protocol to the United Nations Framework Convention
on Climate Change was adopted in Kyoto, Japan, in December
1997 and entered into force on 16 February 2005.

Objective: stabilize atmospheric concentrations of GHGs at a level
that will prevent dangerous interference with the climate system.

Under the Kyoto Protocol, the 'caps' or quotas for Greenhouse
gases for the developed Annex 1 countries are known as Assigned
Amounts

Annex I Parties have a binding commitment to limit or reduce
GHG emissions. Eg USA has to reduce its emissions by 7% and
Canada by 6% etc.
KYOTO MECHANISMS
     Emissions trading - countries can trade in the international carbon credit
     market to cover their shortfall in Assigned amount units. Countries with
     surplus units can sell them to countries that are exceeding their emission
     targets under Annex B of the Kyoto Protocol.

     Joint implementation (JI) - a developed country with relatively high costs of
     domestic greenhouse reduction would set up a project in another developed
     country.

     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. The developed country would be
     given credits for meeting its emission reduction targets, while the developing
     country would receive the capital investment and clean technology or
     beneficial change in land use.

Kyoto mechanisms enhance the flexibility of Annex I Parties to meet their emission
reduction or limitation commitments, by allowing these Parties to take advantage of lower-
cost emission reductions outside their territories.
CARBON CEDITS
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
greenhouse gas with a carbon dioxide equivalent
equivalent to one tonne of carbon dioxide.

Many companies sell carbon credits to commercial and
individual customers who are interested in lowering
their carbon footprint on a voluntary basis.
EMISSION MARKETS
For trading purposes, one allowance or CER is considered
equivalent to one metric ton of CO2 emissions.
These allowances can be sold privately or in the international
market at the prevailing market price.
These trade and settle internationally and hence allow
allowances to be transferred between countries. Each
international transfer is validated by the UNFCCC.
Carbon prices are normally quoted in Euros per tonne of
carbon dioxide or its equivalent.
Currently there are five exchanges trading in carbon allowances:
the European Climate Exchange, NASDAQ OMX
Commodities Europe, PowerNext, Commodity Exchange
Bratislava and the European Energy Exchange.
How buying carbon credits can
     reduce emissions
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.
For example, consider a business that owns a factory putting out
100,000 tonnes of greenhouse gas emissions in a year. Its
government is an Annex I country that enacts a law to limit the
emissions that the business can produce. So the factory is given a
quota of say 80,000 tonnes per year. The factory either reduces its
emissions to 80,000 tonnes or is required to purchase carbon
credits to offset the excess. After costing up alternatives the business
may decide that it is uneconomical or infeasible to invest in new
machinery for that year. Instead it may choose to buy carbon credits
on the open market from organizations that have been approved as
being able to sell legitimate carbon credits.
CRITICISMS
Developed countries have more carbon emissions than developing
countries.

US has one of the highest emissions and yet doesn't’t want to be a part
of the Kyoto protocol.

Developed nations purchase the credits from developing nations so
that they don’t have e to clean their own backyard.

Even though the carbon credit trade that takes place is beneficial to the
developing nations who reduce their emissions and sell the credits to
developed nations( in return for finance or technology etc), the
developing nations play no actual part in reducing their emissions.

This goes against the very purpose of creating carbon credits as the
emissions from developing nations are far lesser as compared to
developed nations.

Unless the developed nations take concrete steps to reduce their
emissions, the Carbon Credits System is nowhere close to being
successful.
THANK YOU

More Related Content

What's hot

Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
Samit Kumar Kapat
 
Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
pratikcool123
 
The Kyoto Protocol
The Kyoto ProtocolThe Kyoto Protocol
The Kyoto Protocol
Hector Rodriguez
 
carbon credits
carbon creditscarbon credits
carbon credits
Kartik Chauhan
 
Carbon Credits & Carbon Offsets
Carbon Credits & Carbon OffsetsCarbon Credits & Carbon Offsets
Carbon Credits & Carbon Offsets
Kumaraguru Veerasamy
 
8 Carbon Trading
8   Carbon Trading8   Carbon Trading
8 Carbon Trading
Dr. Parveen Kaur Nagpal
 
Carbon Markets
Carbon MarketsCarbon Markets
Carbon Markets
Leonardo ENERGY
 
M sc. carbon credit
M sc. carbon creditM sc. carbon credit
M sc. carbon credit
Josef Ak
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
harsh97
 
Carbon trading (1)
Carbon trading (1)Carbon trading (1)
Carbon trading (1)
Neha Sharma
 
Climate change and carbon trading
Climate change and carbon tradingClimate change and carbon trading
Climate change and carbon trading
Jayappa Singanodi
 
Introduction to UNFCCC & International Climate Negotiations
Introduction to UNFCCC & International Climate NegotiationsIntroduction to UNFCCC & International Climate Negotiations
Introduction to UNFCCC & International Climate Negotiations
Janathakshan Gte Ltd
 
CDM clean development mechanism
CDM clean development mechanismCDM clean development mechanism
CDM clean development mechanism
avanidedhia2
 
Carbon trading mechanism
Carbon trading mechanism Carbon trading mechanism
Carbon trading mechanism
Shilpa C
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
Mugadha Bane
 
Carbon Credit for Sustainable Development
Carbon Credit for Sustainable DevelopmentCarbon Credit for Sustainable Development
Carbon Credit for Sustainable Development
Shabin Lalu
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
divinekaur
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
Sandeep Nagarkoti
 
Carbon Footprint
Carbon FootprintCarbon Footprint
Carbon Footprint
Sameer003
 
Clean development mechanism basics
Clean development mechanism basicsClean development mechanism basics
Clean development mechanism basics
Zolt Energy
 

What's hot (20)

Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
 
Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
 
The Kyoto Protocol
The Kyoto ProtocolThe Kyoto Protocol
The Kyoto Protocol
 
carbon credits
carbon creditscarbon credits
carbon credits
 
Carbon Credits & Carbon Offsets
Carbon Credits & Carbon OffsetsCarbon Credits & Carbon Offsets
Carbon Credits & Carbon Offsets
 
8 Carbon Trading
8   Carbon Trading8   Carbon Trading
8 Carbon Trading
 
Carbon Markets
Carbon MarketsCarbon Markets
Carbon Markets
 
M sc. carbon credit
M sc. carbon creditM sc. carbon credit
M sc. carbon credit
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
 
Carbon trading (1)
Carbon trading (1)Carbon trading (1)
Carbon trading (1)
 
Climate change and carbon trading
Climate change and carbon tradingClimate change and carbon trading
Climate change and carbon trading
 
Introduction to UNFCCC & International Climate Negotiations
Introduction to UNFCCC & International Climate NegotiationsIntroduction to UNFCCC & International Climate Negotiations
Introduction to UNFCCC & International Climate Negotiations
 
CDM clean development mechanism
CDM clean development mechanismCDM clean development mechanism
CDM clean development mechanism
 
Carbon trading mechanism
Carbon trading mechanism Carbon trading mechanism
Carbon trading mechanism
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
 
Carbon Credit for Sustainable Development
Carbon Credit for Sustainable DevelopmentCarbon Credit for Sustainable Development
Carbon Credit for Sustainable Development
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
 
Carbon Footprint
Carbon FootprintCarbon Footprint
Carbon Footprint
 
Clean development mechanism basics
Clean development mechanism basicsClean development mechanism basics
Clean development mechanism basics
 

Similar to Carbon credits

Carbon credit
Carbon creditCarbon credit
Carbon credit
Rehan Akhtar
 
Carbon Credits
Carbon CreditsCarbon Credits
Carbon Credits
Dayasagar S
 
Presentaion on carbon credits and kyoto protocol
Presentaion on carbon credits and kyoto protocolPresentaion on carbon credits and kyoto protocol
Presentaion on carbon credits and kyoto protocol
Ankit Agrawal
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
Mohan2209
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
Mohan2209
 
Krishna Dahre presentation 3.pptx
Krishna Dahre presentation 3.pptxKrishna Dahre presentation 3.pptx
Krishna Dahre presentation 3.pptx
KrishnaDahre
 
Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
Sarveshkumar
 
Carbon Credit & Trading Whitepaper
Carbon Credit & Trading WhitepaperCarbon Credit & Trading Whitepaper
Carbon Credit & Trading Whitepaper
Nilesh Singh
 
Carbon Trading
Carbon TradingCarbon Trading
Carbon Trading
anirban_sarkar
 
Emission Reduction Benefits
Emission Reduction BenefitsEmission Reduction Benefits
Emission Reduction Benefits
Ashish Ranjan
 
Soniii
SoniiiSoniii
Soniii
sonia gupta
 
Kyoto protocol
Kyoto protocolKyoto protocol
Kyoto protocol
AvantikaBadgujar
 
Carbon credit & Carbon footprint.pptx
Carbon credit & Carbon footprint.pptxCarbon credit & Carbon footprint.pptx
Carbon credit & Carbon footprint.pptx
ArchanaBalikram1
 
Carbon Credits
Carbon CreditsCarbon Credits
Carbon Credits
williamhaye
 
Emerging Trends in Environmental Management
Emerging Trends in Environmental ManagementEmerging Trends in Environmental Management
Emerging Trends in Environmental Management
GAURAV. H .TANDON
 
Carbon markets and its performance
Carbon markets and its performance Carbon markets and its performance
Carbon markets and its performance
shilpapanginikkode
 
Carbon Credit - Naresh Thakur
Carbon Credit  - Naresh ThakurCarbon Credit  - Naresh Thakur
Carbon Credit - Naresh Thakur
Naresh Thakur
 
carbon bank
carbon bankcarbon bank
carbon bank
Vishal Kachhdiya
 
Investment Funds - Carbon Funds
Investment Funds - Carbon FundsInvestment Funds - Carbon Funds
Investment Funds - Carbon Funds
Dr. Pierre Alexandre DELAGARDELLE
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
Ankur Mathur
 

Similar to Carbon credits (20)

Carbon credit
Carbon creditCarbon credit
Carbon credit
 
Carbon Credits
Carbon CreditsCarbon Credits
Carbon Credits
 
Presentaion on carbon credits and kyoto protocol
Presentaion on carbon credits and kyoto protocolPresentaion on carbon credits and kyoto protocol
Presentaion on carbon credits and kyoto protocol
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
 
Carbon credit
Carbon creditCarbon credit
Carbon credit
 
Krishna Dahre presentation 3.pptx
Krishna Dahre presentation 3.pptxKrishna Dahre presentation 3.pptx
Krishna Dahre presentation 3.pptx
 
Carbon Credit
Carbon CreditCarbon Credit
Carbon Credit
 
Carbon Credit & Trading Whitepaper
Carbon Credit & Trading WhitepaperCarbon Credit & Trading Whitepaper
Carbon Credit & Trading Whitepaper
 
Carbon Trading
Carbon TradingCarbon Trading
Carbon Trading
 
Emission Reduction Benefits
Emission Reduction BenefitsEmission Reduction Benefits
Emission Reduction Benefits
 
Soniii
SoniiiSoniii
Soniii
 
Kyoto protocol
Kyoto protocolKyoto protocol
Kyoto protocol
 
Carbon credit & Carbon footprint.pptx
Carbon credit & Carbon footprint.pptxCarbon credit & Carbon footprint.pptx
Carbon credit & Carbon footprint.pptx
 
Carbon Credits
Carbon CreditsCarbon Credits
Carbon Credits
 
Emerging Trends in Environmental Management
Emerging Trends in Environmental ManagementEmerging Trends in Environmental Management
Emerging Trends in Environmental Management
 
Carbon markets and its performance
Carbon markets and its performance Carbon markets and its performance
Carbon markets and its performance
 
Carbon Credit - Naresh Thakur
Carbon Credit  - Naresh ThakurCarbon Credit  - Naresh Thakur
Carbon Credit - Naresh Thakur
 
carbon bank
carbon bankcarbon bank
carbon bank
 
Investment Funds - Carbon Funds
Investment Funds - Carbon FundsInvestment Funds - Carbon Funds
Investment Funds - Carbon Funds
 
Carbon credits
Carbon creditsCarbon credits
Carbon credits
 

More from jennna

HR practices in sugar industries
HR practices in sugar industries HR practices in sugar industries
HR practices in sugar industries
jennna
 
Lijjat papad
Lijjat papadLijjat papad
Lijjat papad
jennna
 
Big Bazaar
Big BazaarBig Bazaar
Big Bazaar
jennna
 
Du pont analysis 
Du pont analysis Du pont analysis 
Du pont analysis 
jennna
 
IDBI
IDBIIDBI
IDBI
jennna
 
Small Scale Industries
Small Scale IndustriesSmall Scale Industries
Small Scale Industries
jennna
 
Advertising : Dove Bath Soaps
Advertising : Dove Bath SoapsAdvertising : Dove Bath Soaps
Advertising : Dove Bath Soaps
jennna
 
Marketing Case study: United Biscuits
Marketing Case study: United Biscuits Marketing Case study: United Biscuits
Marketing Case study: United Biscuits
jennna
 

More from jennna (8)

HR practices in sugar industries
HR practices in sugar industries HR practices in sugar industries
HR practices in sugar industries
 
Lijjat papad
Lijjat papadLijjat papad
Lijjat papad
 
Big Bazaar
Big BazaarBig Bazaar
Big Bazaar
 
Du pont analysis 
Du pont analysis Du pont analysis 
Du pont analysis 
 
IDBI
IDBIIDBI
IDBI
 
Small Scale Industries
Small Scale IndustriesSmall Scale Industries
Small Scale Industries
 
Advertising : Dove Bath Soaps
Advertising : Dove Bath SoapsAdvertising : Dove Bath Soaps
Advertising : Dove Bath Soaps
 
Marketing Case study: United Biscuits
Marketing Case study: United Biscuits Marketing Case study: United Biscuits
Marketing Case study: United Biscuits
 

Carbon credits

  • 2. “Climate change is the defining challenge of our age.” Ban Ki-moon, CMP 3, Bali, Indonesia
  • 3. BACKGROUND The burning of fossil fuels is a major source of greenhouse gas emissions, especially for power, cement, steel, textile, fertilizer and many other industries which rely on fossil fuels (coal, electricity derived from coal, natural gas and oil). The major greenhouse gases emitted by these industries are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons (HFCs), etc., all of which increase the atmosphere's ability to trap infrared energy and thus affect the climate. The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries.
  • 4. KYOTO PROTOCOL The Kyoto Protocol to the United Nations Framework Convention on Climate Change was adopted in Kyoto, Japan, in December 1997 and entered into force on 16 February 2005. Objective: stabilize atmospheric concentrations of GHGs at a level that will prevent dangerous interference with the climate system. Under the Kyoto Protocol, the 'caps' or quotas for Greenhouse gases for the developed Annex 1 countries are known as Assigned Amounts Annex I Parties have a binding commitment to limit or reduce GHG emissions. Eg USA has to reduce its emissions by 7% and Canada by 6% etc.
  • 5. KYOTO MECHANISMS Emissions trading - countries can trade in the international carbon credit market to cover their shortfall in Assigned amount units. Countries with surplus units can sell them to countries that are exceeding their emission targets under Annex B of the Kyoto Protocol. Joint implementation (JI) - a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country. 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. The developed country would be given credits for meeting its emission reduction targets, while the developing country would receive the capital investment and clean technology or beneficial change in land use. Kyoto mechanisms enhance the flexibility of Annex I Parties to meet their emission reduction or limitation commitments, by allowing these Parties to take advantage of lower- cost emission reductions outside their territories.
  • 6. CARBON CEDITS 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 greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide. Many companies sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis.
  • 7. EMISSION MARKETS For trading purposes, one allowance or CER is considered equivalent to one metric ton of CO2 emissions. These allowances can be sold privately or in the international market at the prevailing market price. These trade and settle internationally and hence allow allowances to be transferred between countries. Each international transfer is validated by the UNFCCC. Carbon prices are normally quoted in Euros per tonne of carbon dioxide or its equivalent. Currently there are five exchanges trading in carbon allowances: the European Climate Exchange, NASDAQ OMX Commodities Europe, PowerNext, Commodity Exchange Bratislava and the European Energy Exchange.
  • 8. How buying carbon credits can reduce emissions 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. For example, consider a business that owns a factory putting out 100,000 tonnes of greenhouse gas emissions in a year. Its government is an Annex I country that enacts a law to limit the emissions that the business can produce. So the factory is given a quota of say 80,000 tonnes per year. The factory either reduces its emissions to 80,000 tonnes or is required to purchase carbon credits to offset the excess. After costing up alternatives the business may decide that it is uneconomical or infeasible to invest in new machinery for that year. Instead it may choose to buy carbon credits on the open market from organizations that have been approved as being able to sell legitimate carbon credits.
  • 9. CRITICISMS Developed countries have more carbon emissions than developing countries. US has one of the highest emissions and yet doesn't’t want to be a part of the Kyoto protocol. Developed nations purchase the credits from developing nations so that they don’t have e to clean their own backyard. Even though the carbon credit trade that takes place is beneficial to the developing nations who reduce their emissions and sell the credits to developed nations( in return for finance or technology etc), the developing nations play no actual part in reducing their emissions. This goes against the very purpose of creating carbon credits as the emissions from developing nations are far lesser as compared to developed nations. Unless the developed nations take concrete steps to reduce their emissions, the Carbon Credits System is nowhere close to being successful.