Agriculture students

1. CARBON TRADING

2. Contents
 Introduction
 Carbon Market
 Who is buying?
 Who is selling?
 History –pollution trading
 Carbon credits
 Cap and trade
 Carbon offsetting
 Carbon Trading Implementation Mechanisms
 The three Kyoto mechanisms are:
 Criticism
 Conclusion

3. Introduction
 Carbon trading is the process of buying and selling permits and
credits to emit carbon-dioxide.
 carbon trading is "an aproach used to control carbon dioxide (CO2)
pollution by providing economic incentives for achieving emissions
reductions. it is some thing called cap and trade or carbon emissions
trading“
 Carbon Emission Trading' Is A Type Of Emission Trading That
Specifically Targets Carbon Dioxide And Its Constituent‘s
Emission. It Is Calculated In Tones Of Carbon Dioxide Equivalent.
 Every polluter is allotted a particular number of credits and can sell
or buy credits from others to maintain the limit on their emissions.

4. Examples Of Carbon Trading
nation nation there scheme
AUSTRALIA CARBON PRICING MECHANISM
EUROPEAN EUROPEAN UNION EMISSIONS TRADING
SCHEME (EU ETS)
JAPAN JAPAN VOLUNTARY EMISSION TRADING
SCHEME (JV ETS )
NEW ZEALAND NEW ZEALAND EMISSIONS TRADING
SCHEME (NZ ETS)
PEOPLE'S REPUBLIC OF CHINA PILOT EMISSIONS TRADING SCHEMES
REPUBLIC OF KOREA KOREA'S EMISSION TRADING SCHEME

5. Who is Buying?
 European private buyers interested in the EU ETS.
 North America Companies With Voluntary but legally binding
companies objective in the chicago climate exchange(CCX).
 Government buyer interested in kyoto companies.
 U. S. multinationals operating in Japan and Europe.
 Power retailers and large consumers regulated by new south wales
(NSW) market in Australia .
 Japanese companies with voluntary commitments under the Keidanren
voluntary Action Plan.

6. Who is selling?
 Energy production from renewable ,wastes and low carbon
intensive fuels.
 Energy Efficiency measures like waste heat recovery.
 Installation of energy efficient equipments.
 Switch over to less GHG emitting production processes.
 Agriculture, Afforestation and Reforestation.

7. Carbon Market
 Carbon market is a market wherein emission allowances are
traded.
 It allows the countries with a certain emission target to trade a
part of their emission allowances.
 The countries are assigned a carbon emission quota and each
member country is expected to allocate this quota among its
producers.
 In case any country or producer exceeds its quota, it can buy
carbon quota from another country or producer who produces
less carbon.

8. History- Pollution Trading
 In the late 1960 s, Ronald Coase, an economist began
promoting the idea of ‘pollution trading’.
 He believed that pollution should be seen as part of the cost of
production.
 It was expected that market forces would eventually deter
businesses from polluting the environment because it would
become less cost-effective.
 Companies were to be granted permission to build polluting
factories in certain regions only if the company guaranteed to
reduce pollution by a greater amount else where (USEPA,
1976)

10. Carbon Credits
•A carbon credit is a financial instrument that represents a tonnes 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 (1
credit= reduction of 1 ton of CO2) Such a credit can be sold in the
international market at a prevailing market rate.

11. Carbon Cradit In India - Fact
 India Pocketed Rs 1,500 Crores In The Years 2005 Just By
Selling Carbon Cradit To Developed Country Client.
 India Has Generated 30 Millions Crbon Cradits & 140 Millions
Are In Pipeline.
Carbon Cradit Traders In India
 Andhyodayn Green Energy
 Reliance Energy Ltd.
 Tata Motors Limited
 Grasim Ind. Ltd.
 Tata Steel Limited
 Bajaj Finserv Limited
 Indo Gulf Firtilizers
 Dharival Ind. Ltd

12. CT Types
 Carbon cap-trade program
 Carbon offsetting

13. Cap and Trade
 CAP- Assignment of an upper threshold limit on the amount
of pollutant that can be emitted (measured in Assigned
Amount Units or AAUs) by a country.
 Emission permits or credits are issued to emit a specific
amount of carbon dioxide (cap) to the country.
 TRADE- the transfer or trade of allowances
 Excess or unused credits can be traded to the countries whose
emissions have exceeded their assigned cap.

15. CARBON OFFSETTING
 Offset Credits for eco-friendly technologies are purchased by developed
nations to avoid or substitute reduction in their own emission.
 Investments in green technologies and harness alternative forms of energy
in the developing nations.
Example :
 A landowner plants an acre of field and can generate credits for how much
Carbon Dioxide is reduced as a result of the plantation
 The credits are known as Offset Credits
 The landowner can sell the offset credits to the potential investors or
industrial facilities
 The facility can buy the offset credits and count it in favor of its emission
responsibilities
 It attests that the same amount of carbon dioxide is reduced in the
atmosphere as a result of the plantation process

16. Carbon Trading Implementation
Mechanisms

17. The three Kyoto mechanisms are:
 Emission Trading (ET)
 Countries whose emissions are less than their assigned amount can sell
the excess amount to countries whose emissions have exceeded their
assigned amount
 The Assigned amounts can be defined as a tradable allowances, or
commodity, and this free market is known as the “CARBON
MARKET"
 Clean Development Mechanism (CDM)
 Developed countries can fund emission reduction projects (e.g. Solar
energy, wind energy and other green technologies) in developing nations
that did not sign Kyoto Protocol
 In exchange, the developed countries earn legally recognized emission
credits called CERs (Certified Emission Reduction) to offset their
emission obligations.

18. Joint implementation (JI)
• Developed countries can implement emission reduction
projects in another developed or developing country and earn
Emission Reduction Units ( ERUs )
• ERUs can be used to meet the carbon allowance or can be sold
in the market.

19. Criticism
 In the context of the Kyoto Protocol, the cap was set by
industrialised countries collectively allocating themselves
permits for 95 per cent of the emissions they had been releasing
before any limits were in place.
 In other words, the setting of the cap was not connected to the
policy objective, for which a much lower cap would have to
have been set.
 The trade is only a cost-management tool, which does not itself
reduce emissions.

20.  Deciding on the number and distribution of permits
 Under the Kyoto Protocol, geographical location was chosen as
the deciding factor
 The existing carbon cap and trade schemes have initially
distributed the permits free of charge
 Reliable monitoring of emissions
 Conversion factors
 Exporting emissions – This process of moving emissions to an
area where they are not accounted for is often referred to as
‘carbon leakage’.

21. Benefits of CARBON TRADING:
 Reduction in green house gas emission
Stringency in the cap or the upper threshold limit is contributing
to lower emission over the years
 Source of revenue for developing nations
Developing nations can earn revenue by selling carbon credits to
countries with more fossil fuel demand.
 Supports a free market system
The carbon trade market is without any economic intervention and
regulation by government except to regulate against force or fraud.
 Impetus for Alternative sources of energy or green technology
Threshold limits encourages industries to harness alternative sources
of energy and invest in green technology globally or in indigenous
research.

22. Disadvantages of CARBON TRADING:
 Right to pollute
Industries in the ratified nations are purchasing legal rights to
pollute the atmosphere.
 Slow process
Industries are opting the easy way– purchase more allowances
than implementing greener technologies
 Lack of centralized system or global framework
Absence of a centralized and accepted global standards/act are
missing.
 No effective carbon reduction in the atmosphere
Leads to carbon reduction in one place and results in carbon
emission in some other place.

23. Conclusion
 Carbon Trading brings forth financial incentives to reduce carbon and
implement eco-friendly/green technologies.
 Stringent assignment of the caps or the upper threshold limits over the
years can ameliorate the green house gas emission problem.
 The alternative/renewable sources of energy like wind, solar and
hydro are supposed to get financial boost to substitute fossil fuels.
 Absence of a standard measuring technique in carbon sequestration or
storage questions the feasibility of Carbon Offsetting techniques.
 Presently, the market is primarily driven by financial interest or gains
by the investment farms as opposed to seeking environmental remedy.

24. REFERENCES
 https://www.epa.gov/ghgemissions/overview-greenhouse-gases
 https://en.wikipedia.org/wiki/Greenhouse_gas_monitoring#Meth
odology
 https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-
emissions-and-sinks
 https://images.app.goo.gl/3dD2nV38LBYv2A4aA
 https://www.sciencedirect.com/science/article/pii/S13522310183
03480
 https://www.researchgate.net/publication/237126440_Monitoring
_and_Management_of_Greenhouse_Gas_Emissions_from_Const
ruction_Equipment_Using_Wireless_Sensors