Download - Carbon Credits and Trading
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Carbon credits and trading: Present and
future scenarios
Presented By :-
NITIN P. AHIRE -1003
KISHORI M. MAHADIK -1049
SAM ALLWYN-1004PRIYA B. CHAUDHARY
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THE BEGINNINGThe concept of carbon credits came into
existence as a result of increasing awareness of theneed to control greenhouse gas emissions.
(Greenhouse gases are mainly Water vapour, Carbon dioxide,Methane, Nitrous oxide, Ozone and CFCs)
The IPCC (Intergovernmental Panel on Climate
Change) has observed that:
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Policies that provide a real or implicit price of carbon
could create incentives for producers and consumers to
significantly invest in low-GHG products, technologies andprocesses. Such policies could include economic
instruments, government funding and regulation
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CARBON CREDIT
Carbon credits are an element used to aid in
regulation of the amount of gases that are being
released into the air. This is part of a larger
international plan which has been created in aneffort to reduce global warming and its effects.
The plan works by capping the amount of total
emissions that can be released by one company orbusiness.
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Carbon credits are measured in tonnes of carbon dioxide. 1 credit = 1 tonne of
CO2. 1 tonne of CO2 would fill a swimming pool the size of 10x25 meters and 2
meters deep.
The credits need to be authentic, scientifically based and comply with a
regulatory body for these to be traded with confidence. Verification is
essential.
These tradable carbon credits are then given a monetary value set by the
market and can be bought and sold between groups on state, national and
international markets.
The owner the carbon credits has the right to emit 1 tonne of CO2 per creditor trade if not needed.
Credits may also be retired, meaning taken off the market. They can be
donated to non-profit groups and are tax deductible in countries where trading
is taking place. Large amounts of credits can be bought and retired, thus
driving the price up and forcing organization to decrease their carbon
emissions which is fantastic for the environment.
As an individual or business you can purchase carbon credits to offset your
UNAVOIDABLE carbon emissions (i.e. car and air travel) under a voluntary
or mandatory scheme.
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There are two types of market in carboncredit:
1. Compliance Market (Annexure I
countries)
2. Voluntary Market (Non- Annexure
countries)
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KYOTO PROTOCOL
The Kyoto Protocol is a legally binding agreement that arose out of the
UNFCCC to tackle climate change through a reduction of green house gas
emissions.
Countries (those listed in Annex I) are legally bound to reduce man-made
green house gases emissions by approximately 5.2%
Individual countries have their own reduction targets outlined in Annex B
of the Kyoto Protocol
It was adopted in Kyoto, Japan, on 11th December 1997
Objective:
stabilisation of greenhouse gas concentrations in the
atmosphere at a level that would prevent air pollution
interference with the climate system
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1. Annex 1 countries: Developed nations like Australia, Canada,European Union (high emitters of GHG).
2. Annex 2 countries: Subgroup of Annex1 nations, developed
nations that pay for the cost of developing nations, such as
Japan, UK, USA, France (high emitters of GHG).3. Developing countries: Best examples are India and China
(low emitters of GHG).
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HOW DOESIT WORK
Being developing countries, India, China etc. have the advantage. Any
company, factories or farm owner can get linked to United NationsFramework Convention on Climate Change and know the 'standard' level
of carbon emission allowed for its outfit or activity. The extent to which I
am emitting less carbon (as per standard fixed by UNFCCC) I get credited
in a developing country. This is typically what we call carbon credit.
A company in a developed nation can reduce its GHG emissions by:
a. Adopting new technology or improving upon the existing technology toattain the new norms for emission of gases, or
b. Tie up with developing nations and help them set up new technology that is
eco-friendly, thereby helping the developing country or its companies
reduce their GHG emission levels and 'earn' carbon credits. These credits
can later be sold.Alternatively, an organization from a developed nation exceeding its GHG
emission allowance can purchase carbon credits from an organization in a
developing nation.
Carbon offset: One carbon offset represents the reduction of one metric
tonne of carbon dioxide or its equivalent in other greenhouse gases.
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CLEAN DEVELOPMENT MECHANISM
Under the CDM and the UNFCCC, any company from the
developed world can tie up with a company in the
developing country that is a signatory to the Kyoto
Protocol.
The industrialized nation and its companies set up new eco
friendly technologies in developing nations that aim to
further reduce emission level of GHG, thereby increasing
carbon credits.
The companies in developing countries must adopt the
newer technologies, emitting lesser gases, and save energy.
Consequently, earning credits
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CDM PROCESS
IDENTIFICATION OF PROJECT AND DEVELOPMENT
OF PROJECT CONCEPT NOTE
DEVELOPMENT OF PROJECT DESIGN DOCUMENT
HOST COUNTRY APPROVAL
SUBMISSION OF THE PDD AND HOST COUNTRY
APPROVAL VALIDATOR
MAKE PDD COMPLETELY AVAILABLE FOR 30 DAYS
VALIDATION OF PROJECT
SUBMISSION OF VALIDATION REPORT AND PDD
REGISTRATION WITH THE CDM
PROJECT IMPLEMENTATION AND MONITORING
VERIFICATION AND CERTIFICATION
POSSIBLE REVIEW BY CDM EXECUTIVE BOARD
ISSUANCE OF CERS TO PROJECT DEVELOPERS
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