18106B1058 Supriya Hanumanthkari Functional Project

STUDY ON CARBON CREDIT TRADING
PRACTICES
Submitted By
Supriya Sunaji Hanumanthkari
UNDER THE GUIDANCE OF

Prof. Varsha Maheshwari
A PROJECT SUBMITTED IN PARTIAL

FULFILMENT OF MMS TO
VIDYALANKAR INSTITUTE OF
TECHNOLOGY
Wadala (East), Mumbai 400 037
April 2020
STUDY ON CARBON CREDIT TRADING
PRACTICES
Submitted By
Supriya Hanumanthkari
UNDER THE GUIDANCE OF

A PROJECT SUBMITTED IN PARTIAL

FULFILMENT OF MMS TO
VIDYALANKAR INSTITUTE OF
TECHNOLOGY
Wadala (East), Mumbai 400 037
April 2020
Signature of Faculty Guide Head of Department

DECLARATION
I hereby declare that this project report submitted by me to Vidyalankar

Institute of Technology, in completion of the Master in Management
Studies (MMS) under the title “Study on Carbon Credit Trading
Practices” has been accomplished under the guidance of Prof. Varsha
Maheshwari is a bona fide work undertaken by me and it has not been
submitted to any other University or institution for the award of any other
degree or diploma certificate or published any time before.

ACKNOWLEDGEMENT
My project on title “Study on Carbon Credit Trading Practices” has been a

great learning experience.
This is to acknowledge Prof. Varsha Maheshwari under whose guidance I

have been able to carry on this project effectively without any trouble. Her
invaluable advice, unwavering trust and unconditional support helped
immensely in timely and successfully completion of the project.
I am also thankful to Prof. Trupti Naik, Assistant Professor, Department of

Management Studies, for providing valuable feedback and suggestions at
various stages of the project as well as for proving personal guidance whenever
needed.
I am grateful to my MMS colleagues Sheetal Dahibavkar and Abhishek

Jambhale for providing pleasant ambience, lifting me up when I was stressed
out and for continuously encouraging me throughout the course of the project. I
would also like to thank our Class Representative (CR) Miss. Zainab Vora for
her constant efforts being taken for fellow batchmates. Thanks to all my
colleagues who have helped me either directly or indirectly, I am grateful for
their valuable inputs. This project would not have been possible without their
help.

Master of Management Studies Department
Vidyalankar Institute of Technology, Mumbai-400037
CERTIFICATE
This is to certify that the project entitled “To Study the Carbon Credit Trading
Practices” is a bona fide work carried out by Miss. Supriya Sunaji Hanumanthkari in
the Masters of Management Studies Department of Vidyalankar Institute of Technology,
Mumbai and is submitted in partial fulfillment of the requirements for the award of the
degree of Masters of Management Studies in Finance.
Assistant Professor
Vidyalankar Institute of Technology, Mumbai
Forwarded by:
Dr. Amit Oak
Professor and Head

Vidyalankar Institute of Technology, Mumbai
Date:
SR CONTENTS PAGE
NO. NO.
.O
O Topic 1: An Epitome of Carbon Credit Trading Practices
O.. Background
1.1 1
1.2 Carbon dioxide Emission of Top countries 2
1.3 Kyoto Protocol (KP) 5
1.4 Carbon credits & their trading 9
1.5 Carbon credit - Accounting & Taxation issues 20
1.6 Manufacturing sector in India 25
1.7 Clean Development Mechanism in India (CDM) 26
1.8 Carbon credits trading policies & practices of Indian organisation 32
1.9 Objective of the study 35
1.10 Hypothesis of the study 37
1.11 Limitation of the study 38
1.12 Conclusion 39
Topic 2: Review of Literature

2.1 Introduction 39
2.2- 2.6 Studies related to Carbon Credits Trading. 49-48
2.7 Research Gaps. 49
2.8 Conclusion. 50
Topic 3: Research Methodology Topic

3.1 Introduction 51
3.2 Research Approach 51
3.3 Research Design 52
3.4 Sampling Design 52
TOPIC Page No.
3.5 Significance of the Research 53
3.6 Population and Sample size 53
3.7 Data Collection 54
3.8 Editing and Tabulating 55
3.9 Data analysis through Statistical Technique 55
3.10 Classification & Tabulation of data 56
3.11 Interpretation of Data 56
3.12 Summary 56
Topic 4: Data analysis, Interpretation

4.1 Introduction 57
4.2 Profile of respondents 58
4.3 Analysis of Respondent’s Interpretation on policies & 62
practices of carbon credits trading in India.
4.4 Testing of Hypothesis 82
4.5 Conclusion 84
Topic 5: Findings, Conclusions and Suggestions

5.1 Finding of the study 86
5.2 Conclusion of the study 87
5.3 Recommendation and suggestion of the study 88
1. An Epitome of Carbon Credit Trading
Practices
1.1Background
The earth is unique to have got an environment with its own chemical composition. It also
includes components that serve as power houses of energy to run all the environmental
systems in it. But the main source of energy for the Earth is the Sun. It has been observed
that a part of the incoming energy from the Sun is reflected back to space due to the
presence of ozone layer that surrounds the Earth and is retained by Earth’s gravity. The
Earth’s atmosphere is made of gases comprising of Nitrogen, Oxygen, Carbon dioxide
which form around 99% of the entire composition. By volume, the dry air contains about
78% Nitrogen, nearly 21% Oxygen, around 0.036 % Carbon Dioxide and the other gases
make up nearly up to 0.964%. Nitrogen and Oxygen are very important for supporting life
on the Earth.
Carbon dioxide is essential for all green plants and plays an important role in
photosynthetic activity, thus sustaining and balancing the food chains on the planet. The
various processes that are carried out by the living components of the planet are carried out
with the exchange of heat energy. Certain processes absorb energy while others emit the
same. Along with the incoming heat energy from the Sun and the energy emitted by various
bio-chemical as well as manmade ways remains contained within the atmosphere. This
results in rise in temperature of the planet. The presence of gases like Carbon Dioxide,
Carbon Monoxide, Methane, etc. trap this heat by forming a layer amid the various layers
of atmosphere and blocking the outlet of this heat. These gases are called Green House
Gases (GHGs).
These gases absorb some extent of heat from the atmosphere and then reemit this heat in
the atmosphere. In the absence of these gases, a large portion of the heat energy will escape
and the temperature of the surface of Earth will go down to a level where life will not be
supported anymore. It is very important for these gases to be present in the required amount
-1-
in the atmosphere. However, with the commencement of industrial revolution in the mid
eighteenth century man-made activities have increased ten-folds. Due to industrialization
many harmful activities of human beings have come into practice, such as burning of fossil
fuels, burning of plastic and polythene, destruction of 2 forests to expand urbanization and
all this has led to an increase in the level of greenhouse gases, especially carbon dioxide,
in the atmosphere.
Presently, it acts like a ceiling in the atmosphere and the average surface temperature is
increasing gradually. This phenomenon is known as Global Warming; which is a big threat
to our planet. Global warming was also quoted by Intergovernmental Panel on Climate
Change (IPCC) as “emissions resulting from human activities are substantially increasing
the atmospheric concentrations of greenhouse gases, which will enhance the greenhouse
effect, resulting on average in an additional warming of the Earth's surface” (IPCC, 2007).
Pathak et al. (2009) illustrated their study on Global Warming Mitigation Potential (GMP).
They explained that global warming is a major environmental challenge and it poses lots
of threats on our planet. They also depicted that there is an alarming need to develop
greenhouse gases mitigation strategies for reducing the adverse impacts of climate change
resulted from Global Warming. They also emphasized that all the countries around the
world need to work together to prevent the disruption of natural and human systems on the
planet.
1.2 Carbon-dioxide Emission of Top Countries
The following table 1.1 shows the Carbon-dioxide emission of top 20 countries with per
capita in tonne. The following table also depicts that China is the main producer of Carbon
dioxide in the world and the share of it is 29.51 % followed by USA, India and Russia
which release the Carbon-dioxide at large scale. In terms of per capita, the level of Carbon
dioxide emission of Australia, USA, Saudi Arabia, Canada and South Korea is higher than
other countries.
-2-
Table 1.1 Carbon-dioxide Emission of Top 20 Countries
Carbon-dioxide Emission of Top 20 Countries (2015)
Sr. No. Country Name Carbon-dioxide Percentage (%) Carbon-dioxide
Emission Emission Per
(in kilo tonne) Capita
(in tonne)
* World 36061710 100 ----
1 China 10641789 29.51 7.7
2 USA 5172338 14.34 16.1
3 India 2454968 6.81 1.9
4 Russia 1760895 4.88 12.3
5 Japan 1252890 3.47 9.9
6 Germany 777905 2.16 9.6
7 Iran 633750 1.76 8
8 South Korea 617285 1.71 12.3
9 Canada 555401 1.54 15.5
10 Saudi Arabia 505565 1.4 16
11 Indonesia 502961 1.39 2
12 Brazil 486229 1.35 2.3
13 Mexico 472018 1.31 3.7
14 Australia 446348 1.24 18.6
15 South Africa 417161 1.17 7.7
16 United Kingdom 398524 1.11 6.2
17 Turkey 357157 0.99 4.5
18 Italy 352886 0.98 5.9
19 France 327787 0.91 5.1
20 Poland 294879 0.82 7.6
(Source: NEAA, 2016)
The following table 1.2 is a Time Series Report (2011-15) which is country-specific and
this report consists of Carbon-dioxide Emission of above 20 countries. The following
table describes the percentage change in Carbon-dioxide emission. In the table, USA,
Russia, Japan and Germany are, on a regular basis, trying to lessen its Carbon-dioxide
-3-
emission level but the level of Carbon-dioxide emission in China and India is regularly
increasing.
Table 1.2
Carbon-dioxide Emission of 20 Countries (Time Series Report, 2016)
Sr. Country 2012 % 2013 % 2014 % 2015 %

No Name
* World 34968039 100 35672051 100 36084066 100 36061710 100
1 China 10056756 28.760 10503137 29.444 107111037 29.684 10641789 29.510

2 USA 5164192 14.768 5255530 14.733 5312226 14.722 5172338 14.343
3 India 2090857 5.979 2191277 6.143 2334381 6.469 2454968 6.808
4 Russia 1833976 5.245 1824579 5.115 1822210 5.050 1760895 4.883
5 Japan 1293511 3.699 1312750 3.680 1281569 3.552 1252890 3.474
6 Germany 801677 2.293 815812 2.287 773020 2.142 777905 2.157
7 Iran 591310 1.691 600055 1.682 625021 1.732 633750 1.757
8 South 614771 1.758 611531 1.714 611741 1.695 617285 1.712
Korea
9 Canada 556797 1.592 568364 1.593 572262 1.586 555401 1.540
10 Saudi 455673 1.303 459502 1.288 486767 1.349 505565 1.402
Arabia
11 Indonesia 443625 1.269 4527444 1.269 483633 1.340 502961 1.395
12 Brazil 457077 1.307 485620 1.361 505395 1.401 486229 1.348
13 Mexico 481703 1.378 486432 1.364 480692 1.332 472018 1.309
14 Australia 428229 1.225 429079 1.203 438504 1.215 446348 1.238
15 South 410065 1.173 423218 1.186 431469 1.196 417161 1.157
Africa
16 Unite 467584 1.337 455878 1.278 415177 1.151 398524 1.105
Kingdom
17 Turkey 339238 0.970 324736 0.910 352593 0.977 357157 0.990
18 Italy 395145 1.130 362512 1.016 335610 0.930 352886 0.979
19 France 351479 1.005 355664 0.997 323495 0.897 327787 0.909
20 Poland 309560 0.885 304238 0.853 289144 0.801 294879 0.818
(Source: ibid, 2016)
-4-
1.3. Kyoto Protocol (KP)
After eight years of the nations came together in Kyoto, Japan in 1997 i.e. on February
16, 2005, the Kyoto Protocol finally came into force which marked a shift from
negotiation to concrete action. This protocol has described six greenhouse gases
emissions i.e. Carbon Dioxide (CO2), Sulphur Hexafluoride (SF6), Per Fluoro
Carbons (PFCs), Hydro Fluoro Carbons (HFCs), Nitrous Oxide (N2O) and Methane
(CH4).
During the third session of the Conference of Parties (COP 3) of United Nations
Framework Convention on Climate Change (UNFCC), it had been accepted that
developed countries were predominantly accountable for the increase in greenhouse
gases emission level in the atmosphere. After considering its adverse effect, in Kyoto
Protocol, Annexure – I countries, such as Australia, France, Germany, United
Kingdom, etc., have bound the quantified reduction commitments that means they
have to cut down the level of greenhouse gasses emissions from the environment.
Annexure II countries comprise of developing nations, to be precise, India, China,
Saudi Arabia, Israel, etc.
The first commitment period of this Protocol which started in 2008 came to an end in
2012. The reasons in realization of this Protocol were complexities in obtaining the
necessary number of ratification from the countries. During the first commitment
period, 37 industrialized countries and the European Community committed to
condense greenhouse gases emissions by at least five percent below 1990 levels and
during the second commitment period which commenced in 2013, this value would
increase to eighteen percent. Though, the compositions of parties of this commitment
period are unlike the first commitment period as the composition consists of Annexure
I and Annexure II countries (as mentioned above) while in the previous commitment
period, the composition was 37 industrialized countries and European community.
Presently 191 nations have ratified the Kyoto Protocol. India, in conjunction with
many other developing and developed countries, has ratified the protocol but still USA
is not in agreement. (Kyoto Protocol, 2014)
-5-
Kyoto Protocol is divided into two parts, one is project based and another is allowance
based. The Kyoto Protocol Mechanism, shown in figure 1.1, makes available three
mechanisms which are facilitating the developed or developing countries with quantified
emission limitations and commitments. The first two mechanisms i.e. Joint Implementation
(JI) and Clean Development Mechanism (CDM) are project based and third mechanism
i.e. International Emission Trading (IET) is allowance based mechanism.
Figure 1.1
Kyoto Protocol Mechanism
Kyoto Protocol
Project Based Allowance Based
Joint Implementation Clean Development International Emission

(Between Developed Mechanism (Between Trading (Between
Countries) Developed and Developed Countries)
Developing Countries)
Emission Reduction Certified Emission Assigned Amount

Units (ERUs) Reductions (CERs) Units (AAUs)
(Based on: Kyoto Protocol, 2014)
-6-
The explanation of three mechanism is as follows:
• Joint Implementation (JI)

• Clean Development Mechanism (CDM)
• International Emission Trading (IET)
1.3.1. Joint Implementation (JI)
Joint implementation (JI) allows a developed country with a relatively high cost of
domestic greenhouse gases reduction would set up a project in another developed country
which has low cost of domestic greenhouse gases reduction. These types of projects will
produce Emission Reduction Units (ERUs). This mechanism would supply benefits to the
countries in a flexible and cost-efficient way by means of fulfilling a part of their Kyoto
commitments, while the host countries will get benefits from technology transfer and
foreign investments.
1.3.2 Clean Development Mechanism (CDM)
Clean Development Mechanism (CDM) allows a developed country, with an emission

limitation and emission reduction commitment under the Kyoto Protocol, to implement an
emission reduction project in developing countries. These types of projects can earn
saleable Certified Emission Reductions (CERs), the standardized emission offset
instrument in the world, credits, which are alike to one ton carbon dioxide reduced, which
can be counted towards meeting Kyoto targets. CDM project stimulates the emission
reduction and sustainable development while giving industrialized nations some flexibility
as to how they meet their emission limitation or reduction targets.
-7-
1.3.3 International Emission Trading (IET)
International Emission Trading is an allowance based mechanism and in this trading,

developed nation agrees to the targets for reducing or limiting the Green House Gases
(GHGs) emission. These accepted targets expressed as the levels of allowed emissions are
known as assigned amounts. The total allowed emissions are divided into Assigned
Amount Units (AAUs). International Emission Trading (IET) allow the nations that have
emission units to spare, means emissions permitted but not used, to sell this excess capacity
to those nations that are over their targets. So in this type of trade developing or developed
countries can trade the AAUs.
The above mentioned three mechanisms aim at reducing the level of greenhouse gases
emission through the environment and the explanation of these mechanisms clearly
exhibits that a new commodity was created for trading. The principal gas of greenhouse
gases is carbon dioxide, so the main element in this type of trading is carbon which can be
traded as any other commodity. The market created by this type of trading is known as
“Carbon Market”.
Among the three mechanisms, Joint Implementation and International Emission Trading
are for developed countries and the mechanism for developing countries is only Clean
Development Mechanism. According to the United Nation’s Country Classification
Report, 2017, India is a developing country, so CDM is the most suitable mechanism for
our nation. As affirmed above, the tradable commodity, in CDM, is Certified Emission
Reductions (CERs) credits and in the carbon market, it is commonly known as Carbon
Credits and trading of carbon credits in carbon market is known as Carbon Credits Trading.
(DESA, UN, 2017)
-8-
1.4 Carbon Credits and their trading
According to the Kyoto Protocol, it is clearly shown that the carbon market exists and the
tradable commodity in this market is carbon credits. Now Carbon Credits Trading is an
emerging trading market in India which targets to control the carbon or greenhouse gases
emission from the atmosphere. In India, this trading can be done under Clean Development
Mechanism (CDM) of Kyoto Protocol. Presently, carbon credits’ trading is utilized by
various developed and developing nation across the globe to meet their obligations which
were specified by Kyoto Protocol. According to UNFCC, on August 26, 2002, India signed
and ratified the Kyoto Protocol but it came into force on February 16, 2005. Since then,
from the treaty point of view, India is exempted. Now it is expected that India may take
some benefits from carbon credits trading. (Kyoto Protocol, 2014)
There is an agreement in Kyoto Protocol to put the caps or quotas for member countries
on the maximum amount of greenhouse gases or carbon emission. For this, the member
countries set their quotas on the emission of installations which will be running by the
local business entity and this entity is called as Operators. All the countries who joined
this protocol manage their limit for carbon emission by their own national registries, which
are validated and monitored by UNFCCC. In this protocol, every operator or a business
unit has allotted the quota to emit greenhouse or carbon dioxide gas whereas finding it
unable to utilize the assigned quota of greenhouse or carbon dioxide gas emission; they
are allowed to sell their unused cap as carbon credits in the global market.
Generally, it observes that the demand for energy grows day-by-day regularly, which
results into the increase of the level of emission of carbon. Although, according to Kyoto
Protocol, the level of carbon emission must be within the cap and carbon credits trading
mechanism allows the industry to be flexible in their planning. In carbon credits trading,
there is a chance for the operator to find the economic way for reducing its carbon emission
level, either by purchasing the carbon credits from those who have surplus the carbon
credits or by some investment in clean technology which is helpful in cleaning the
environment. (UNFCC, 2014)
-9-
To diminish the global warming, carbon credit is a major instrument at international and
national levels since it proffers a way in reducing the level of carbon emissions on an
industrial scale at international and national levels by capping the total carbon emission
annually and letting the global market by assigning a monetary value for any shortfall
through carbon credits trading. These carbon credits can be traded between two or more
business entities or brought from worldwide market, at an exceptionally nominal cost
(Morris, 2008). This amount can be utilized by the different trading entities for several
carbon reduction schemes around the globe.
The framework of Carbon Credits Trading is shown in figure 1.2.
Figure 1.2
Carbon Credits Trading
(Based on: “The Carbon Market – The Essential Guide” by Tim Morris, 2008)
- 10 -
There are several companies which are interested to sell their carbon credits to
individual and commercial customers, who are fascinated to reduce their carbon
emission level as per the environment regulations of the country. The interested
companies purchase the carbon credits from carbon development or investment fund
agency which has the carbon credits from CDM projects and these companies are
called as carbon offset companies. In general, most of the transactions are not
performed directly by the entities but by the help of operators who have set up as per
the cap or quota.
1.4.1 Meaning of Carbon Credit

Carbon credit is an instrument used to reduce the level of carbon dioxide or greenhouse
gas emission, which is caused by a project or manufacturing the products by any entity.
According to Kyoto Protocol the value of one carbon credit is equivalent to one ton carbon
dioxide reduction.
1 Carbon Credit = 1 Ton of Carbon Dioxide Reduction

(Source: UNFCC, 2014)
This concept comes into existence for the reason that several countries are striving to
protect the environment. Carbon credit, recognized to overcome or prevent the impact of
global warming, is a basic component of carbon emission trading at global level which has
been providing a way to decrease the greenhouse gas emission level on an industrial scale
along with monetary benefits that can be earned by selling these carbon credits to various
organizations which are involved in its trading. These credits can likewise be traded
between the few organizations or might be purchased or sold in the worldwide market at
the common market price. Carbon credits may be utilized to fund the carbon reduction
ventures or schemes between the trading partners across the world. This idea was
formalized in the Kyoto Protocol with an understanding among 180 nations and these
credits are granted in the form of Certified Emission Reductions (CERs) credits to those
entities who have successfully completed their project.
- 11 -
1.4.2 Need of Carbon Credits
Since Global warming is posing danger to the environment, the concept of Carbon Credits
Trading (CCT) can be utilized to reduce the level of carbon or greenhouse gas emission
from the environment. This concept got the attention after the concept laid down by Kyoto
Protocol. When this concept was formulated, the developed and developing countries set
themselves a target regarding carbon dioxide or greenhouse gas emission by employing
some measures to reduce the level of carbon or greenhouse gases in their in house
manufacturing units. However, it is not feasible that they shut down their manufacturing
units, the developed or developing countries pledged to maintain the balance of the
greenhouse gas emissions by setting up those projects which are encouraging the use of
alternate energy together with plantation as is the another way to reduce the level of carbon
emission. That’s the reason that the concept of Carbon Credits Trading is a very effective
way to reduce the impact of pollution in the environment as the reduction of carbon
emission is also made the objective of business.
Steps to Work out

Various companies procure the carbon credits which are generated through the investment
in Joint Implementation (JI) or through Clean Development Mechanism (CDM). The prices
of carbon credits are realized by the defined process of competitive bidding. The work out
of carbon credits trading can be explained by the following mechanisms:
Framework of Policy for Carbon Credits Trading

There is a defined policy for the Carbon Credits Trading all over the world. In the
framework of the carbon credits trading policy shown in figure 1.3, the first phase is to
identify the project which will undergo for carbon credits trading process and then develop
a note of a concept to the project. In the second phase, the organization has to build up a
project design document and in next phase the organization needs a host country approval.
After the approval of host country, this project will go under the verification and
certification. In the last phase of this framework, the CDM Board reviews this complete
process and after reviewing all the aspects, this board has issued CERs to the project
developers.
- 12 -
Figure 1.3
Carbon Credits Trading Policy Framework (Based on: NCDMA 2014)
SUBMISSION OF THE PROJECT

IDENTIFICATION OF PROJECT
DESIGN DOCUMENT (PDD)
AND DEVELOPMENT OF PROJECT
AND HOST COUNTRY
CONCEPT NOTE
APPROVAL BY VALIDATOR
MAKE PROJRCT DESIGN

DEVELOPMENT OF PROJECT DOCUMENT ACCORDING
DESIGN DOCUMENT (PDD) TO HOST COUNTRY
HOST COUNTRY APPROVAL VALIDATION OF PROJECT
SUBMISSION OF
VERIFICATION AND
VALIDATION REPORT AND
CERTIFICATION
PROJECT DESIGN
DOCUMENT
POSSIBLE REVIEW BY CDM REGISTRATION WITH THE

EXECUTIVE BOARD (CDM-EB) CDM
ISSUANCE OF CERS TO PROJECT PROJECT IMPLEMENTATION

DEVELOPERS AND MONITORING
- 13 -
1.4.3 Carbon Credits Trading Network
In carbon credits’ trading process, a developed nation with a relatively high cost of
domestic greenhouse gases reduction would set up a clean technology project in another
developed nation which has low cost of domestic greenhouse gases reduction. After the
first stage, a developed country sets up a project in another developed or developing
countries, where the cost of carbon or greenhouse gas emission reduction project is
comparatively low, under the clean development mechanism. After setting up the project
the developed country would receive carbon credits and another country would receive
clean technology and some monetary benefits. At the end of this process, the country,
having carbon credits, is allowed to sell their carbon credits in the global market under the
international emission trading norms with the aim to quantify the emission reduction and
limitation commitments. The network of carbon credits trading is shown in figure 1.4.
- 14 -
Figure 1.4
Carbon Credits Trading Networks
SELLER BUYERS
EXCHANGE
BANKS ANNEXURE 1
COUNTRIES
INDIVIDUALS TRADING BANKS

EXCHANGE
BANKS
NON- INDIVIDUALS
GOVERNMENT
ORGANIZATIONS
& GOVERNMENT
CONSULTANTS
BROKERS &
TRADERS
CONSULTANTS
INTERMEDI-
ARY OTHERS
SERVICES
ANNEXURE 2
COUNTRIES CONSULTA-
NTS
NON-
GOVERNMENT
OTHERS ORGANIZATION
S&
GOVERNMENT
(Based on: National CDM Authority, Ministry of Environment, Forest and Climate
Change, Government of India, 2014)
- 15 -
1.4.6 Buying Carbon Credits = Reduction in emissions………..How???
If the organization buys the carbon credits, it implies the interest of the organization in
reducing the carbon emission level from the atmosphere. So, the organization buys carbon
credits in lieu of polluting the air. The overall meaning of this concept is that carbon
emission becomes a cost to business like other inputs such as labour, machinery or raw
materials.
1.4.7 Carbon Capture and Storage (CCS)
The modern concept ‘Carbon Capture and Storage (CCS)’ used for reducing the level of
carbon emission from the atmosphere is the best suitable technique for large scale carbon
dioxide emission. The best possible mode for carbon capture is from fossil fuel power
plants. Chemical plant, steel manufacturing units, cement industries, etc. are other sources
of carbon capture. In terms of geological formations, some other sources, such as expired
gas and oil reservoirs, saline aquifers, etc., of carbon capture are present. (IEA, 2017)
1.4.8 Procedure for obtaining Carbon Credits

Before carbon credits can be sold, the important factors to be taken into considerations are
as follows:
➢ Identification of specific areas of a project where the emissions can be reduced.
➢ Identification of a suitable CDM project and calculate the value of carbon emission
reduction in that project.
➢ Before deciding the baseline, collection of all the data regarding the emission of
greenhouse gases without investment is provided.
➢ Comparison of the above baseline with the lower carbon emission after investment
in Clean Development Mechanism.
- 16 -
➢ At last, in Joint Implementation projects, if the carbon reduction is achieved, only
then carbon credits can be sold.
The above steps stated that earning of carbon credits is not an easy task. If the company
wants to earn carbon credits, they need to follow the above steps and earn carbon credits
(NCDMA, 2017).
1.4.9 Certification Requirements for Carbon Credits Trading
A number of documents are required for the trading of carbon credits in which the main
document required for carbon credits trading is “Letter of Approval” which is provided by
the host country. There is a third party that works as a validation and certification
organization, certifies the seller and buyer for trading the carbon credits.
1.4.10 Economics of Carbon Credits
The economics of Carbon Credits is as follows:

1 Carbon Credit = 1 Ton of Carbon Dioxide Reduction
(Source: UNFCC, 2012)
➢ Currently though the market value of a single carbon credit is around US$
30 (EESI, 2017).
➢ Now even if the cost of locking away a tonne of carbon is between US$ 20
and US$ 25 per tonne depending on the type of product or technology used,
it offers a margin of US$ 5 per Carbon Credit or CER credit.
➢ Assuming the economies of scale, this becomes an attractive model for

Industries, Power plants and Consumers alike to gain additional income or
reduce costs in the process of meeting their commitments towards
controlling pollution and joining the drive to be Eco-friendly.
- 17 -
➢ Many Indian companies and also those in other developing countries must
realize that the money could be generated by some eco-friendly
initiatives.
➢ They would rapidly turn to Clean Technologies and would begin trading
their carbon credits with companies in the US and the European Union.
1.4.11 Carbon Trade Exchange (CTX)
Since 10 years, Carbon Trade Exchange (CTX), the primary exchange for trading of
Carbon Credits in the world, provides regular help to the project developers, traders,
corporate, Non-Government Organizations (NGOs), etc. for secure trading of carbon
credits. In addition, joining at CTX costs nothing, the only charge it takes is on selling of
carbon credits and that is equal to 2 % on completed sales. Another added benefit of CTX
is that it of great advantage for buyers as they do not take any charge from them. (CTX,
2016)
1.4.11.1 Key Features of CTX
The key features of CTX are as below mentioned:
❖ The settlement and clearing of funds and credits is on immediate basis.
❖ Complete security checks and full encryption are provided to all the
members.
❖ Live information, related to market, has provided to the buyers which helps in
understanding the sales trends and project characteristics.
- 18 -
❖ Any buyer can purchase and sell in one of the four currencies i.e. Euro, GBP,
USD and AUD.
1.4.12. Actual Transaction: Example
The concept of carbon credits trading may be discussed with the help of the following
example:
Present emissions of a company = X Tons

Emission Quota for a company = Y Tons
If X > Y,
The company has got two choices:
1. Install new machinery that will reduce the emissions from X to Y Tons
2. Purchase of carbon credits worth (X -Y) Tons of emissions.
Thus, according to the above example, companies have to limit the level of carbon
emission. If the level of carbon emission exceeds beyond the limit, then companies have
only two choices i.e. either they adopt new technology or purchase carbon credits (Morris,
2008).
1.4.13 Real Carbon Credits
CDM, a flexible mechanism, offers an opportunity to capped entity to develop real,

measurable, permanent emissions reductions. In the process of CDM, project sponsors puts
forward a report of their concepts and potential planned actions, for reducing the emission
with the help of Designated Operational Entity (DOE). The next phase witnesses the CDM-
EB reviews on every project and his decision on whether the said project is valid for carbon
reduction or not and if the project is approved, CERs or carbon credits will be allocated to
the concerned organization.
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1.5 Carbon Credits – Accounting and Taxation Issues
In the current state of affairs, global warming deviation issue has intensified across the
world and to have a check on this earth-wide temperature increase. Carbon Credits can play
an imperative role since it is utilized to diminish the level of carbon emission or greenhouse
gasses. The investors have unveiled lots of opportunities in carbon credits trading. Carbon
Credits or Certified Emission Reductions (CERs) can be earned by the decrease in the level
of environmental pollution and this can likewise be traded in the world. Carbon credits
trading can be done by three ways:
❖ Bidding for tenders floated by several governments.

❖ Trading on stock exchanges.
❖ CER purchase agreements.
There is a huge demand of carbon credits. According to Credit Rating Information Services
of India Limited (CRISIL) report issued in May 2010, there is estimation that India claims
31% CDM projects of the aggregate world carbon credits trade. In spite of the fact that in
India lots of CDM projects are being undertaken, there is a lot of uncertainty regarding
accounting, taxation, legal and regulatory issues. For resolving these issues, a few nations
are treating carbon credits as services for tax assessment and some are dealt with as
government grants. The Bangalore Chamber of Commerce and Industry says that the
carbon credits should be dealt with as services and taxed accordingly. The rationalization
of this idea is that the carbon credits are exported to the developed nations and these can
easily be traded on stock exchanges like securities, henceforth they treated that carbon
credit is a service. In any case, for elucidation this matter, Delhi Value Added Tax (DVAT)
notification additionally supports this idea. (Bothra and Kothari, 2010)
1.5.1 Pertinent issues regarding Carbon Credit traded as “Commodity”
The Forward Markets Commission has granted trading authorization to the carbon credits
and this can incorporate into the list of commodities granted trading consent in the "others"
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class. The Multi Commodity Exchange (MCX) of India went into a merger, in September,
2005, with Chicago Climate Exchange (CCX), to introduce carbon credits trading in India
and giving further liquidity to the market.
As the current notification, which is issued by the Government of the National Capital
Territory of Delhi, informs the legitimate position with respect to the taxability of carbon
credits, Carbon Credits or Certified Emission Reductions (CERs) are the tradable
commodity with a defined market value and a prepared market with lots of willing sellers
and buyers and openly transferable as other attractive marketable commodities. As
indicated under Section 2(1) of the DVAT Act, 2004, any
individual/organization/undertaking/entity occupied in the activity of sale or purchase of
goods is a 'dealer'. For carbon credits trading there is a dealer involved who can trade
carbon credits as other commodities. The notification further clarifies that under area
“2(1)(m) of the DVAT Act, 2004,” "goods" have been characterized as – "goods" implies
each sort of movable property (other than newspapers, significant cases, stocks, shares, and
securities) and incorporates –
❖ Livestock, all material, commodities, grass or things attached to or sharing some

portion of the earth which are consented to be served before sale or under an
agreement of sale; and
❖ Property in goods (regardless of whether as goods or in some other form) involved
in the execution of a works contract, lease or hire-purchase or those to be utilized
as a part of the fitting out, improvement or repair of movable property.
To reach the inference, Reliance Industry was set on a few judgments of the Hon'ble
Supreme Court in the matter of “H. Anraj versus Government of Tamil Nadu, [1986] 1
SCC 414, Vikas Sales Corporation and Another versus Commissioner of Commercial
Taxes and Another JT 1996 (5) SC 482, Yash Overseas versus Commissioner of Sales Tax
and Others (Civil Appeal No.2155 of 2000), M/s. Sunrise Associates versus Govt. of NCT
of Delhi and Others (Judgment dated 28.4.2006) etc.” The notification number
256/CDVAT/2009/43 dated 13.01.2010 issued by the Government of the National Capital
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Territory of Delhi, concluded that CERs or Carbon Credits are taxable under DVAT Act,
2004 and the rate applicable was 4% as the said thing is secured under “Entry No.3 of IIIrd
Schedule added to the DVAT Act, 2004.” In the historic point instance of “Vikas Sales,
the question for consideration under the watchful eye of the Hon'ble Supreme Court was,
whether the transfer of an Import License called REP License by the holder thereof to or
someone else, constitutes a sale of goods inside the significance of and for the purposes of
the Sales Tax authorizations of Tamil Nadu, Karnataka and Kerala; and whether it was
qualified to impose tax or not. (Bothra and Kothari, 2010)
REP License or Replenishment License, fundamentally issued by the Government of India

to the enrolled exporters, to encourage the import of basic sources of information required
for the assembling of the items are exceptionally useful for openly trade. Therefore, many
of enrolled exporters began trade in these licenses and made unprecedented benefits. In
this way, the tax authorities guaranteed that exchange of such licenses was liable to deals
assess as these licenses are met all requirements to be goods according to sales tax act.
Another case can likewise demonstrate that CERs or Carbon Credits have a few attributes
to qualify as “goods”. If there should arise an occurrence of “Tata Consultancy Services
versus State of Andhra Pradesh it was, inter alia, held and was repeated in case of BSNL
versus UOI [2006] 152 Taxman 135/282 ITR 273/145 STC 1”, that anything that had the
accompanying characteristics would be viewed as goods.
➢ Its utility
➢ Fit for being purchased and sold
➢ Fit for being transmitted, transferred, delivered, stored and possessed
So Carbon Credits by the righteousness of satisfying the above three said ascribes can be
fit the bill to be considered as “goods”.
1.5.2 Important issues related to Accounting and Taxation
In India, the principle bookkeeping and tax collection issue is that the profit from trading
of carbon credits in which head and segments of accounting standards. For the most part,
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the income from an offer of carbon credits might be represented under the head of Business
and Profession and in the event of intangible assets it would be assessable under the head
of Capital Gains, however, a large portion of the organizations are recording acquiring
from trading of carbon credits as income from other sources. As indicated by the previous
point, it ought to be assured that carbon credit is a commodity so service tax will be
pertinent on trading of “CERs” or Carbon Credits and in the event of agreements bringing
about conveyance Value Added Tax (VAT) will be applicable. In India, carbon credits are
generally sold to the worldwide purchasers, so applicability of VAT is impractical.
Consequently sale of carbon credits to the worldwide purchasers must be qualified as
exports and the concerned authorities didn't explicit specify made in such manner.
A few nations have given recommendations with respect to the carbon credits that these
credits are government grants; however, this approach would be unsuitable, since
government's grants are essentially those grants which are received by an entity on nominal
or concessional rate or might be free of cost. In the event of carbon credits, this may no
sort of advantages which is given by the government; these are just incentives which are
given by the government for a decent social cause. So, with respect to this, “the Accounting
Standard Board (ASB) of the Institute of Chartered Accountants of India (ICAI)” has
issued and introduced draft on the direction note on accounting for CERs or carbon credits.
This draft clarifies the accounting principles identifying with recognition, measurement
and disclosures of Carbon Credits created under the Clean Development Mechanism
(CDM). By and large, in India, CDM is the principle system which is received by the
associations for lessening the carbon emission. As per the protocol, if developed country
puts their funds in CDM projects of developing countries for diminishing the carbon
emission level; this must be certified by the CDM Executive Board of UNFCC. After
verification of various aspects of CDM projects, the board issues a certificate of carbon
credit or CER and these are utilized to meet the country's commitment under the protocol.
For this certificate, an entity needs to experience a considerable measure of innovative
work, documentation and approval process. For bookkeeping treatment of carbon credits,
“ICAI” has issued an exposure draft in three distinctive ways. These are as per the
following:
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➢ The first phase of the draft showed the expenses in the research and
development phase. During the analyses of the project, any cost incurred on
development should be accounted for as enumerated in Accounting Standard (AS)
26 for intangible assets.
➢ The second phase of the draft is CERs held with the CDM Executive Board
which states that when carbon credits are in the approval stage, these should be
accounted for as per provisions of Accounting Standard (AS) 29 as Contingent
Assets. If the CERs are approved by the Board, these should be recorded as
intangible assets under AS 26.
➢ The third and last phase is specifically identified with the carbon credits held
available to be purchased. In this phase, if an enterprise has carbon credits which
are to be traded during the normal course of business then these ought to be
accounted as Inventory under the provision of Accounting Standard (AS) 2. The
Para 8 of AS 26 undoubtedly states that if any item under this standard does not
meet the meaning of intangible assets, the use to obtain it or produce it is inside
perceived as an expense when it is incurred.
As per the above description, it is clearly found that the accounting treatment of carbon
credits is possible and organizations provide the treatment of carbon credits in their account
books according to the above draft.
1.6 Manufacturing Sector of India
The Manufacturing Sector is one of the emerging sectors in India. Recently, Hon’ble Prime
Minister of India, Shri Narendra Modi launched “Make in India” campaign to recognize
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India as a manufacturing hub on the global map which will also provide the recognition to
the Indian economy and with it, it is expected that India will become the fifth largest
manufacturing country in the world by the end of the year 2020. Growth in the manufacturing
sector is one of the essential figures that affect the Gross Domestic Product (GDP) and
presently, in India, the contribution of the manufacturing sector in GDP is 16 Percent and
Government of India has set a target that it shall be 25 percent by 2025. It will be expected
that the complete India’s manufacturing sector worth will become US$ 1 trillion by 2025
(IBEF, 2017). Now, carbon credit has begun to be traded like any other commodity in India
and Multi Commodity Exchange (MCX) of India has become the first exchange to trade
carbon credits in India. The categorization of Indian manufacturing sector is shown in the
following table 1.3:
Table 1.3
Categorization of Indian Manufacturing Sector
Sr No. Manufacturing Sector Sr.No. Manufacturing Sector

1 Agribusiness 24 Gems and Jewellery
2 Auto Components 25 Healthcare Products
3 Autoclaved Aerated Concrete 26 Hydro-Electric equipment
Block Products
4 Automobile Manufacturing 27 Industrial Oxygen Products
5 Aviation 28 Information Technology (IT)
Equipment
6 Biotech Products 29 Infrastructure
7 Bricks Manufacturing 30 Leather Products
8 Carbohydrates Products 31 Material Handling Equipment
9 Carbon Black 32 Oil and Gas
10 Cement 33 Optical Products
11 Chemicals 34 Organic Products
12 Electrical and Mechanical 35 Packing Industry
Machinery
13 Electrical Products 36 Paper Products
- 25 -
14 Electronics Products and 37 Petroleum Products
Components
15 Energy and Power 38 Pharmaceuticals
16 Fabricated Metal Products 39 Polyester Products
17 Fertilizers 40 Rubber and Plastic Products
18 FMCG 41 Solar Energy Equipment
19 Food and Beverages 42 Steel Products
20 Food Processing 43 Surface Coating Equipment
21 Forging Products 44 Synthetic Products
22 Furniture 45 Telecommunication Components
23 Garments and Textile 46 Television Components
(Source: IBEF, 2017)
1.7 Clean Development Mechanism in India

Kyoto Protocol of UNFCC came into force in India on February 16, 2005, so India had to
mitigate the effect of greenhouse gas emission. The aim of establishment of Clean
Development Mechanism (CDM) projects in India was to meet their greenhouse gases
emission reduction commitments for the reason there were lots of benefits of implementing
CDM projects in India, such as reduction in carbon emission from an environment,
employment generation, an increase in standards of living, etc.
CDM provides trading of greenhouse gases or carbon emission reductions which are
measured in terms of Certified Emission Reductions (CERs) or carbon credits. According
to the Kyoto Protocol of UNFCC, one CER or carbon credit is equivalent to one metric ton
of carbon dioxide reduction. CDM also provides an opportunity to adopt different cleaning
technologies and also be paid for emission reductions. (CDM, NCDMA, 2016)
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1.7.1 Clean Development Mechanism (CDM) Project Cycle
CDM project cycle has four stages and these stages are as follows:
1. Project Design and Development
In this phase, companies prepare a document of the design of CDM project and then
develop a concept note regarding the implementation of a project.
2. Validation and Registration
In the second phase of CDM project cycle, the project must be validated by the designated
authority and afterward it will be registered to the national authority i.e. National Clean
Development Authority (NCDMA).
3. Project Monitoring
In this phase, the project is closely monitored by the national authority.
4. Verification, Certification and Issuance of CERs
The fourth and the last phase consist of verification, certification and issuance of CERs. In
this phase, the CDM project was verified by the designated authorities and then it is
certified by UNFCC. After verification and certification process, UNFCC issues the CERs
to the registered CDM project.
1.7.2 Guidelines for the registration of CDM Project in India

In India, there is a defined authority of CDM named as National Clean Development
Mechanism Authority (NCDMA) which has clearly described the guidelines for the
registration of CDM Project and those guidelines are as follows:
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❖ Purpose
The purpose of establishment of CDM project is to assist the developing nations in

achieving the sustainable development. Another purpose of implementing the CDM project
is related to developed nations as it assists the developed nations in achieving compliance
with part of their quantified emission limitation and reduction commitments.
❖ Eligibility
The eligibility criteria for CDM project is clearly defined by NCDMA. Only those projects
are eligible, which are having the following criteria:
➢ The project should lead to real, measurable and long-term greenhouse gas
mitigation.
➢ The CDM project must be social well-being that means it should lead to
alleviation of poverty by generation additional employment.
➢ The project must be economic well-being that means the CDM project should
provide some additional revenue.
➢ Another criterion is that the CDM project must be environmental well-being which
means that it helps in reduction of the level of pollution.
➢ The project should be technological well-being; it means that the activity of CDM
project should lead to the transfer of environmentally safe and sound technologies
that are comparable to best practices in order to assist in upgradation of the
technological base.
1.7.3 Procedure for submission of CDM Project Report to NCDMA
In India, there is a designated authority, named as National Clean Development Mechanism

Authority, for all types of activities related to the CDM projects. There is a clearly defined
procedure for submission of CDM project report to NCDMA in which the first stage is to
fill the user registration form, available at the website, by the project proponent. Followed
by the acceptance of the registration by the National CDM Authority, the project proponent
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shall fill the Project Concept Note (PCN) online and also upload the Project Design
Document (PDD). The project proponent also requires submitting the same in hard copy
and soft copy in CD to the Member Secretary of NCDMA with the help of covering letter.
The NCDMA examines the submitted document very closely and if they have any query
related to the CDM project, the same should be asked from the project proponent. After
that, the proposal of the CDM project put up for the consideration. The NCDMA provides
around 10 to 15 days to the project proponent and his consultant for the presentation
regarding their CDM project proposal. All the members of NCDMA seek clarifications
during the presentation and once the members of Authority are satisfied, the Host Country
Approval (HCA) is issued by the Member-Secretary of NCDMA.
1.7.4 Clean Development Mechanism (CDM) Projects for Different

Sectors in India
In India, nowadays several organizations are taking interest in Carbon Credits Trading.
There are 13 different sectors, which are identified by Ministry of Environment, Forest and
Climate Change, Government of India for Clean Development Mechanism (CDM) projects
and currently, 2938 projects are registered at National Clean Development Mechanism
Authority (NCDMA). The sector wise list of approved CDM projects is shown in table 1.4:
Table 1.4
Sector wise list of approved CDM Projects
Sr. Sector No. of Percentage

No. Projects
1 Afforestation and Reforestation 28 0.95
2 Agriculture 3 0.10
3 Chemical Industries 19 0.65
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4 Energy Demand 224 7.62
5 Energy Distribution 9 0.31
6 Energy Industries ( Renewable/ Non-Renewable 2311 78.66
Sources)
7 Fugitive Emissions from Fuels (Solid, 4 0.14
Liquid and Gas)
8 Fugitive Emissions from Production and 5 0.17
Consumption of Halocarbons and Sulphur
Hexafluoride
9 Manufacturing Industries 243 8.27
10 Metal Production 4 0.14
11 Mining/ Mineral Production 4 0.14
12 Transport 13 0.44
13 Waste Handling and Disposal 71 2.42
Total (No. of Projects) 2938 100
(Source: NCDMA, 2017)
2938 CDM projects have been registered at National Clean Development

Mechanism
Authority (NCDMA), Ministry of Environment, Forest and Climate Change,
Government of India from different states of India. The state wise list of approved CDM
projects is shown in table 1.5:
Table 1.5
State wise list of approved CDM Projects
Sr. No. States No. of Projects Percentage
1 Andhra Pradesh 218 7.42
2 Arunachal Pradesh 1 0.03
3 Assam 15 0.51
4 Bihar 9 0.31
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5 Chhattisgarh 105 3.57
6 Goa 4 0.14
7 Gujarat 372 12.66
8 Haryana 37 1.26
9 Himachal Pradesh 101 3.44
10 Jammu and 6 0.20
Kashmir
11 Jharkhand 32 1.09
12 Karnataka 255 8.68
13 Kerala 19 0.65
14 Madhya Pradesh 74 2.52
15 Maharashtra 388 13.21
16 Meghalaya 4 0.14
17 Orissa 81 2.76
18 Punjab 74 2.52
19 Sikkim 10 0.34
20 Tamil Nadu 371 12.63
21 Tripura 1 0.03
22 Uttarakhand 50 1.70
23 Uttar Pradesh 173 5.89
24 West Bengal 80 2.72
25 Rajasthan 237 8.07
26 Chandigarh 1 0.03
27 Delhi 17 0.58
28 Puducherry 3 0.10
29 Multi-State 199 6.77
30 Others 1 0.03
Total (No. of 2938 100.00
Projects)
- 31 -
1.8 Carbon Credits Trading Policies and Practices of Indian
Organizations
Presently, many Indian organizations are involved in carbon credits trading which earn
monetary and non-monetary benefits. These companies establish the projects under the
clean development mechanism and with the help of these, they can earn carbon credits.
The details of CDM projects of five companies are as follows:
1.8.1 Bindal Paper Ltd, Ghaziabad, Uttar Pradesh
This company is a manufacturing based company and is involved in carbon credits trading
in the CDM project. The details of CDM project are shown in the following table 1.6. This
table clearly shows that this company earns 491, 844 CERs or Carbon Credits.
Table 1.6
CDM Project Details – Bindal Paper Ltd
Project Id 1149-08
Name of the Project BPL Biomass Co-Generation and
Recovering Soda CDM Project
Location of the Project Village – Mkhiyali, Tehsil – Sader,
District – Muzaffarnagar Uttar Pradesh.
Sectorial Scope Chemical Industries
Total No. of CERs Earned 491,844
Activity Scale Small
Approval Status Approved
Project Start date 16th June 2007
Project completion date 1st January 2009
(Source: NCDMA – India, 2017)
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1.8.2 India Fal – G, Visakhapatnam, Andhra Pradesh
The company, one of the biggest organizations involved in carbon credits trading, aims at
reducing the level of carbon emission from the atmosphere and earns carbon credits from
its different projects. The table 1.7 clearly shows that this company earns 53601 carbon
credits annually and the estimation of 10 years of earning of CERs or carbon credits will
be 536010. The details of its CDM project no. 6 are shown in the following table:
Table 1.7
CDM Project Details – India – Fal - G
Project Id 1064/01/2012
Name of Project India - FaL - G Brick and Blocks Project

No.6
Location of the Project Visakhapatnam, Andhra Pradesh
Sectorial Scope Manufacturing Industries
No. of CERs Earned (per annum) 53601
Activity Scale Large
Project Start date 01st Dec 2012
Project completion date 30th Nov 2013
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1.8.3 RICO Auto Industries Limited, Gurugram, Haryana
This company is a famous manufacturing organization in carbon credits trading and the
core competency of this company is to manufacture auto parts or components. This
organization saves some part of energy through necessary changes in its manufacturing
process. The table 1.8 clearly shows that this company earns 36552 CERs or carbon credits.
The details of the company’s CDM project are as follows:
Table 1.8
CDM Project Details – RICO Auto Industries Limited
Project Id 1721-09
Name of Project Energy Efficiency through
Manufacturing Process
Modification
Location of the Project Village - Manesar, District –
Gurugram and Village –
Dharuhera, District – Rewari,
Haryana
Project Start date 20th Nov 2008
Project Completion date 19th July 2009
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1.8.4 SKOL Breweries Ltd., Sonepat, Haryana
This organization is also a manufacturing organization and its core competency is in

breweries. The objective of this organization is to reduce carbon emission level. They
measure the amount of energy consumption in its organization and then they implement a
CDM project. The details of CDM project are shown in table 1.9. The following table
clearly shows that this company earns 55816 CERs or carbon credits.
Table 1.9
CDM Project Details- SKOL Breweries Ltd.
Project Id 1390-09
Name of Project Energy Efficiency and Fuel Switch
Measures in a Brewery
Location of the Project Sonepat, Haryana
Sectorial Scope Energy Industries
Project start date 29th Oct 2007
Project completion date 20Th Nov 2008
1.8.5 United Phosphorus Limited, Vadodara, Gujarat

This organization, registered as a manufacturing based organization, was using Naphtha as
an industrial fuel, which is a big source for carbon emission and now with the help of the
following project they switched their fuel from Naphtha to Natural Gas. The details of the
project are shown in table 1.10. This table clearly shows that they earn 526751 CERs or
carbon credits from this project.
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Table 1.10
CDM Project Details – United Phosphorus Limited
Project Id 188
Name of the Project Industrial Fuel Switching from Naphtha to Natural

Gas without extension of capacity and lifetime of
the facility.
Location of the Project GIDC, Jhagadia, Vadodara, Gujarat
Activity Scale Large
Project start date 1st June 2002
Project completion date 30th September 2006
1.9 Objective of the Study
❖ Carbon credits mechanism, being a comparatively newer concept for Indian

manufacturing organizations, so there is an attempt to understand it fully and in
depth with respect to the Indian perspective.
❖ To explore the ways that organizations come to know about carbon credits
trading.
❖ To find out whether trading of carbon credits is influenced by the variables viz:
pollution levels, geographical location, environmental regulations, economic
status and industrialization.
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❖ To identify the different types of carbon credits that is frequently traded by the
Indian manufacturing organizations.
❖ To measure the factors concerning carbon credits trading on the Indian
manufacturing organization’s profile such as type of operations, number and
type of products manufactured, financial position, geographical location, etc.
❖ To find the appropriate steps in reducing the level of carbon emission by Indian
manufacturing organizations.
❖ To evaluate the carbon credits revenues are accounted as operating income or
other income.
❖ To find the benefits gained by the organizations on implementing carbon credits
trading practices such as improvement in social status and market share value.
❖ To identify the different aspects of carbon credits trading practices such as
social responsibility and sustainable development.
❖ To suggest a framework for obtaining carbon credits in India.
1.10. Hypothesis of the Study
Based on the research objectives some hypotheses have been formulated. In this research,
the researcher formulates the null hypotheses and alternative hypothesis, which are as
follows:
H0: The trading of carbon credits does not vary with respect to the geographical location,
economies of scale, etc.
H1: The trading of carbon credits does vary with respect to the geographical location,
H0: Carbon credits trading practices do not provide any help in waste management
for protecting the environment and sustainable development.
H1: Carbon credits trading practices do provide help in waste management for
protecting the environment and sustainable development.
- 37 -
1.11. Limitations of Research Study
The following limitations have been acknowledged during the course of the present
research:
➢ The research area of the study is the entire nation but it is very difficult to cover
each and every state of the nation.
➢ The research topic is very wide and the researcher has limitation of time to cover
each and every aspect related to carbon credits trading. Thus time factor can be
considered as one of the limitations.
➢ The results of this study may change due to demographic characteristics and time
of the study.
1.12 Conclusions of the Study
The present chapter has briefly introduced the several aspects of Global Warming, Kyoto
Protocol, Carbon Credits Trading (CCT) and Clean Development Mechanism (CDM). This
chapter has also highlighted the manufacturing sector of India. This part of the study
concludes with the data regarding the involvement of Indian organizations in Clean
Development Mechanism projects. The detailed review of literature pertinent to the present
research topic has been done in the following chapter. The aim of the next chapter is to
identify the research gaps and to develop research objectives.
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1. REVIEW OF LITERATURE
2.1. Introduction
Review of literature intends to evaluate a text written by someone to consider the critical
points of current knowledge including substantive findings, as well as theoretical and
methodological contributions to a particular topic (Cooper, 1998). There are a number of
researchers who have worked a lot on Carbon Credits Trading. These studies are divided
into five categories, which are listed below:
1) Climate Change Regulation and Carbon Sequestration
2) Emission Market
3) Carbon Credits Trading Market
4) Manufacturing Sector with respect to Foreign Context
5) Manufacturing Sector with respect to Indian Context
2.2. Studies related to Carbon Credits Trading: Climate Change

Regulation and Carbon Sequestration
In the first section of literature, following reviews are related to climate change regulation
and carbon sequestration:
Trivedi (2016) focused his study about greenhouse gas market. He opined that greenhouse
gas market was increasing day-by-day around the world. He emphasized that this new and
emerging market offered effective risk management strategies for various organizations
with emission constraints and substantial opportunities. His research also provided the brief
overview regarding Kyoto Protocol, carbon credits trading and greenhouse market. Finally,
the researcher concluded that how developing countries had managed their energy
resources or maximized their opportunities related to greenhouse gas market.
- 39 -
Bothra (2016) described in her research about the green pasture of carbon credits and
changes in eco-system. Her main concern of research was on ecological imbalances and
global warming issues. She recognized six greenhouse gases such as Carbon dioxide,
Hydro fluorocarbons, Sulphur hexafluoride, Methane, Nitrous oxide and Per-
fluorocarbons. She emphasized on the two ways of reducing greenhouse gases and
maintained the ecological balance. First was sequestration, which was used to decrease the
impact of carbon emissions and second was to offset the impact of emission of greenhouse
gases by undertaking a green project. She also discussed in her study about the different
aspects of Carbon Credits Trading such as Carbon Funds, Carbon Exchanges, Emission
Trading Registries, Global Greenhouse Registry, Carbon Rating Agencies and Energy
Intensive Industries.
Adukia (2011) suggested that various actions must be taken for reducing the carbon
emission level. The researcher focused on different aspects of reducing the level of carbon
emission from the environment; these are global climate system, action plans and initiatives
by organizations, the role of United Nations, steps of emission trading, implementation
program by the government of different nations, etc.
Gupta (2011) mentioned in her study that the global warming was the main phenomenon
in climate change and this phenomenon were directly related to carbon credits trading.
She observed that several researchers were promoting the various policies and practices
of carbon credits trading. She advocated that carbon dioxide was one of the most
important greenhouse gases and it was produced by combustion of fuels and one ton of
carbon dioxide reduction is equivalent to one carbon credits. She depicted that carbon
credits trading had a worldwide opportunity. Finally, she concluded her study that carbon
credits trading had some control on Green House Gases (GHG) emission and the pre-
decided limits needed to control the GHG emissions from different enterprises and
business units. In this exploration, the main focus of the researcher was to propose the
best approach for reducing the carbon emission and awareness of carbon credits trading.
- 40 -
Parson and Keith (1998) depicted in their study that the impact of non-renewable
energy on atmosphere might be reduced by isolating the subsequent carbon and
sequestration from the environment. They also explained that the recent work on this idea
had demonstrated an incredible progress in building up the different required
technologies and furthermore in understanding the few sorts of potential issues for
sequestration of carbon.
2.3 Studies related to Carbon Credits Trading: Emission Market

In this section, the various research studies have been reviewed with related to the emission
market. Some of them are in the following paragraph:
Lobo and Raghavendra (2016) described in their study about expectations and current
scenario of Carbon Credits Emission Market. According to them, Carbon credits’ trading
was a mechanism which was used to control the environmental pollution. They proposed
that this mechanism must be satisfied by giving monetary incentives to accomplishing
emission reductions of the pollutants. They explained that the limit on the amount of
pollutant, that might be emitted, was set and the limit or cap was traded in the form of
carbon credits and these credits could be sold in the global market. They advocated that
Emission Trading with the help of carbon credits was now perceived as the best way to
moderate the climate change. They also stated that there was a generic need to introduce a
new tool i.e. carbon tax along with emission trading and carbon credits trading. The
government had to apply this type of tax on polluting companies and forced them to reduce
the emission levels.
Kumar (2016) described the carbon emission market, carbon taxes and carbon credits
trading. He explained that both carbon taxes and carbon credits trading were carbon
emission market-based instruments but they could be distinguished by several criteria such
as environmental effectiveness, simplicity, political acceptability, fiscal revenue and
volatility. He also described the procedure for carbon credits trading. This is as follows:
➢ Setting a Clear Goal - Capping Emissions
➢ Assigning Responsibility - Allocating Allowances
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➢ Facilitating Cost-Effective Emission Reductions – Trading
➢ Ensuring Accountability - Monitoring and Reporting
➢ Ensuring Compliances – Reconciliation or settlement
Frunza et al (2014) described in their study about measuring the value of the fraud and
analyze the particular period where the carbon market was driven by missing trader fraud
movements. After this, the government passed a law to reduce these types of fraud by
applying the model. These authors also estimate the actual impact of the value added tax
extortion on the carbon credits market at around $ 1.3 billion.
Das (2011), partner with Ernst & Young in advisory services explained that in the
developed world, there were some intermediaries representing the carbon credits buying
community. He said that sometimes this community misguided their various clients and
then the clients start believing that the carbon credits trading was very risky and tedious
job and they also believed that there was no proper return in that type of trading. He
examined after this incident, several companies started selling their carbon credits at very
low rates. The researcher insisted that companies must approach to only renowned
consultants that could help them for the transaction of carbon credits at proper rates.
Wang et al (2009) explained that the environmental protection related polices of the
Chinese government was totally focused on sulfur dioxide emissions. They depicted that
after the authorization of Kyoto Protocol; several project based activities were developed,
majorly known as Clean Development Mechanism, which were used for carbon credits
trading. Their research showed that carbon dioxide emission trading was much lesser in
China as compared to the sulfur dioxide emission trading.
2.4 Studies related to Carbon Credits Trading Market
This section covers the extensive literature related to the market of carbon credits trading
in India and abroad. Some studies of various researchers are in the following paragraphs:
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Soni (2013) mentioned in his study that the per capita carbon dioxide emissions of India
would increase by approximately 3.5 tonnes by 2030. This research is totally focused on
the per capita carbon dioxide emission.
Wang (2012) described that several things play various roles in increasing the clean
development mechanism in the shipping industry, such as higher government efficiency,
larger project endowment, high-quality expertise and infrastructure. He found in his
research that attraction of clean development mechanism in the shipping industry, there
were several factors are responsible such as the promotion of small-scale projects,
upgradation of the infrastructure, increase in knowledge and assistance of technologies.
Massey (2008) described that there was a lot of scope of carbon credits in international
trade. In this research, the researcher explained several ways for the trading of carbon
credits and how the industries and individuals could generate revenues.
Prasad and Sikarwar (2008) described that there were several Indian corporate who deal
in carbon credits trading and earn some revenue from this concept. They named some of
these corporate in his study and these were SRF Chemicals, Gujarat Fluoro-chemicals and
Grasim Industries. They examined that a government undertaking body, named as Institute
of Chartered Accountants of India (ICAI), had prepared new accounting norms which were
to be used for trading of carbon credits and those companies, which earned revenue by the
trading of carbon credits, had to prepare their financial statements as per the new norms.
They stated that these latest norms had been developed after working out the specific
reports which are related to the carbon credits trading. They depicted that there was a
provision of some additional benefits in the norms for clean technology. Finally, they
described that several corporate demanded a uniform accounting system, so that the trade
might become easier.
Singh (2007) described that India had lots of opportunities in carbon credits trading and
clean development mechanism. He described in his research that in India, there were
several ongoing projects which are related to non-conventional energy sources by which
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several business players earned carbon credits. He depicted that this was a new phase of
development in India.
2.5 Studies related to Carbon Credits Trading: Manufacturing Sector

with respect to the Foreign Context
This section covers the extensive literature with reference to the carbon credits trading for
manufacturing sector in foreign context. Reviews of studies of various researchers are in
the following paragraph:
Shrivastava and Carnzee (2016) described in their study about the impact of Indian and
foreign company on carbon credits trading, especially the price of carbon credits. They
emphasized on Tata group, which followed Norway’s Statoil on carbon-price path. They
stated that Tata Group was following the oil and mining companies to pay for their
emissions which was generating through its production units like automobile
manufacturing, tea production, etc. They also emphasized on Europe’s biggest natural gas
producer, i.e. Statoil, which directly supports a global carbon price to lower the carbon
emissions. They stated that according to Paris deal climate, in which nations had to reduce
the emission level of Carbon, Tata Group, had to pilot them progressively for their
approximately 10 companies.
Singh (2008) described that the price of carbon credit was decreased. She analyzed that
two months back the price of one carbon credit was 20 Euro, but the new price was 14
euro. In this way, she felt that this decrease in prices was short term and after some time
there was a chance that the price might be increased. She depicted that according to CDM
of Kyoto Protocol, CERs or carbon credits were issued by UNFCC to the developing
nations, for example, India, China, and so on and for reduction in carbon emission level in
atmosphere, these carbon credits could be purchased by the developed nation. She
examined that single carbon credit was proportional to one ton reduction of carbon dioxide
or its corresponding greenhouse gas. She found that the price of carbon credits had been
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decreased in the market due to different reasons and the main reason behind that the
reduction in price of carbon credits was economic slowdown and the affect of this
economic slowdown, the demand of various products were radically reduced and several
organizations taking a temporary shutdown, so the carbon emission level had also been
reduced and the demand of CERs in the spot market was also going down. She further
stated that the price of crude was also reduced because of this economic slowdown. Finally,
she analyzed that according to New York Mercantile Exchange, the price of one barrel
crude was below $47 in Dec, 2008 but in July 2008, the price of crude was touching to a
record high i.e. $147 per barrel, after which it had been reducing. She stated that at that
time, organizations had to take a decision related to sell the carbon credits for their future
fund requirements. She further stated that an oversupply situation had been created by
Lehman Brothers that was around 10 to 12 million carbon credits being traded in the last
two months and in this circumstance a few organizations required prompt cash to get over
this present credit crunch, so they could sell their CERs in the market at low prices,
however a few buyers had postponed their purchases.
Kopfle et al (2008) emphasized on the protection of the environment with the help of
carbon credits trading. The focus of their research was to protect the environment from
various types of iron and steel products manufacturing organizations. They stated that if
the organizations used natural gas in comparison to coal, as a fuel source, then the emission
of carbon dioxide might be reduced. They explained Midrex Process, which was a natural
gas-based direct carbon emission reduction method. They stated that if the organizations
used 80% hot charged Direct Reduce Iron (DRI) in the Electric Arc Furnace (EAF) then it
was found that the carbon emission might be reduced to 47% per ton of steel produced than
the blast furnace. They also explained that some part of the world, such as Latin America,
Middle East, Russia and several part of Asia; use this Midrex Process. In that research,
they explained that till 2007 approximately 14 million tons of new Midrex Plant capacity
was started up recently and more than 20 million tons were under construction in the above
part of the world.
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2.6 Studies related to Carbon Credits Trading: Manufacturing Sector
with respect to the Indian Context
This section covers the extensive literature with reference to the carbon credits trading for
the manufacturing sector in an Indian context. Some studies of various researchers are in
the following paragraphs:
Sivasangari and Rajan (2016) opined that carbon credits trading is one of the fastest-
growing market and the worth of this markets was around $ 100 billion and the expected
worth after ten years would be around $ 1 trillion. This research was covered agro forestry
and forest ecosystems and they described that in Clean Development Mechanism (CDM),
bamboo could generate a tradable amount of carbon credits and this would promote the
management for the cultivation of woody bamboos in agro forestry. They suggested that
this would also provide some help for the rural communities in generating the additional
income.
Mercker (2016) explained in his study about the business generating from carbon credits
trading by the forest landowners. He gave an outline of carbon sequestration and carbon
credits trading in his study; with the help of these concepts, the forest landowners generate
some business. He focused to those forest landowners, with a defined commitment to long-
term sustainable forest management, who should consider themselves for enrolling in the
carbon credits trading program. He depicted that this was a contractual agreement, with
some underlying costs that might not be suited for all proprietorships. He described that
timber was the fundamental item for the forest landowners for trade and during the contract
time frame; this would straightforwardly influence the carbon sequestration rates. He
observed that the landowners’ revenue from this traditional forest product might become
decline or even flat. He suggested to the forest landowners that the carbon credits trading
might provide some offsetting revenue in the emerging ecosystem markets. He further
stated that the characteristics of every forested property were that, it could be considered
diversely and it might be possible that it could also influence the net revenue from the sale
of carbon credits.
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Ploss (2016) described in her study of environmental assets i.e. green house gas reduction
projects. She explained that from an establishment of green house reduction projects
companies would earn carbon credits and she advised that for trading, carbon credits must
be quantifiable, real and verified by designated authority. She illustrated in her study that
six green house gases were eligible for carbon credits and these gases had different values
which were totally depending on their Global Warming Potential (GWP); methane was
around 21 times more potential than carbon dioxide. So, she advised to those organizations
which were generating greenhouse gases like methane, carbon dioxide, etc. must think
about carbon credits trading. She also described a procedure in her study, for the above
organizations, to earn carbon credits.
Nath et al (2015) described the two concepts which were related to carbon credits trading,
these were Clean Development Mechanism (CDM) and Reduced Emission from
Deforestation and Forest Degradation (REDD). Their research was totally focused on
biomass carbon storage and sequestration. In this research, they explained that the Biomass
carbon storage and sequestration rate were 30–121 Mg/ha (Mg is a Mega-gram = 1 x 10^6
grams or a metric ton and ha is hectare) and 6–13 Mg/ha per year respectively, in woody
bamboos. This research would also provide some help for those companies which were
regularly trying to reduce their carbon emission levels. They suggested that companies
would incorporate their carbon emission plans by planting woody bamboos in some areas
and these companies could also earn some money by CDM and REDD schemes.
Upadhyay (2015) focused his research on renewable energy sector. He opined that the
development process of any industry must be as green as possible and he also believed that
this process could help in boosting clean energy projects and also providing a significant
help in solving finance-related challenges of the organizations. He emphasized on that the
energy, which was used by industries, must be generated through natural resources i.e.
solar power, wind power, energy from biomass, etc. He suggested that companies must
think about the manufacturing of that equipment, which produces maximum energy, with
the help of natural resources. He totally emphasized on the development process as green
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as possible and he also pointed out that if organizations invested some amount of their
funds in green projects then they would earn carbon credits and with the help of carbon
credits trading they earn more money.
Narasimham (2011) explained about the basic solution of infrastructure waste such as fly-
ash. The researcher focused on infrastructure waste, especially fly ash, which would be
generated from thermal power plants of India. He suggested that companies used this fly-
ash as the raw material for manufacturing of pavement bricks and other construction
materials like cement, etc. The main focus of his research was to dispose of this dangerous
fly ash and protect our environment. He advised that with the help these types of projects,
companies would earn carbon credits.
Prasad (2011) explored that there were lots of opportunities in carbon credits trading. She
explained that Reliance Power grasped the opportunity by earning around $ 1,000 million
from three ultra-mega power projects and this company would also earn $ 400 million in
next 10 years by registering and installing its 4,000 MW Tilaya ultra mega power project
by procuring carbon credits. She further stated that the other two mega projects were also
registered with the Clean Development Mechanism- Executive Board (CDM-EB) of
UNFCC for procuring carbon credits.
Purohit and Purohit (2007) focused his study on windmill pumps. He depicted that the
annual carbon dioxide emission in India was around five million tonnes. He explained that
based on past experiences about the diffusion of windmill pumps; the annual CER volume
by 2012 was around 13,000 to 46,000 and would be expected to 0.3 million by 2020. He
explained that for this earning of CER, the government set the level of subsidy on windmill
pumps. Finally, he analyzed in his study that, due to additional earnings from windmill
pumps, several companies would start taking interest in manufacturing the windmill
pumps.
- 48 -
2.7 Research Gaps
However, following major gaps have been identified at the end of the review process,
which actually justifies the rationale of this research:
➢ The researcher could not find any major study related to types of carbon credits
that are frequently traded by the Indian manufacturing organizations.
➢ It has been found that few researches have been conducted on the involvement
of the Indian manufacturing organizations in carbon credits trading.
➢ Lack of significant research has been noted in the available literatures on the
provisions of usage for the purchased carbon credits by the manufacturing
companies of India.
➢ It has been identified that few types of research have been conducted which
illustrate the adoption of carbon credits trading practices by the Indian
manufacturing companies.
➢ The researcher could not find any major study on the challenges associated with
accounting and taxation issues on carbon credits trading practices.
➢ It has been identified that few researches have been conducted on carbon
credits trading practices on reduction of environmental pollution and other
aspects like waste management, sustainable development, etc.
Therefore, above points indicate that there are several research gaps on the concept of
Carbon Credits Trading and based on the above gaps, the researcher formulate its research
objectives.
- 49 -
2.8 Conclusion
The conclusion of the review of literature was that there was a lack of awareness about the
concept of carbon credits in various manufacturing companies in India. The main problem
was that the procedure of the carbon trading was quite complex to understand, especially
by Indian manufacturing companies. According to the review of literature, there was an
absence of adequate environment regulations in India. A good number of literatures have
been reviewed and it is found that several companies earned monetary benefits like SAIL,
Reliance, etc. It has also been found that there was lack of awareness of carbon credits
trading in Small and Medium Level Enterprises (SMEs) of India, but some were taking
significant interest and earn revenue from it. At the end of this chapter, several research
gaps have been identified. Based on these research gaps, some research objectives have
been framed and these research objectives have been instrumental in setting the directions
of the present research. The next chapter of the study has been devoted to the research
methodology adopted in the present study.
- 50 -
3.RESEARCH METHODOLOGY
3.1 Introduction
Research in common parlance refers to a search for knowledge. One can also define research
as a scientific and systematic search for pertinent information on a specific topic. In fact,
research is an art of scientific investigation. A research methodology is the way of defining the
activity of research, the procedure of research, determining the elements of such research in
terms of scientifically adopted models or approaches, designs and tools (Kothari, 2014). The
present study has made an attempt to fulfil the rational requirements of a scientifically
conducted research to the maximum possible extent. Based on the identified research gaps as
derived through an extensive review of literature, research objectives have been set up and the
research hypotheses have been framed. Subsequently, decision points pertaining to specific
research approach, specific research and sampling design have been adopted. The research
questionnaire is designed and its reliability and validity are tested. Once the questionnaire has
been established to be credible, the same has been administered to collect the data. Finally, the
data have been edited, coded and statistically examined. Figure 3.1 depicts an overview of the
research approach adopted in this study.
3.2 Research Approach
Research approach defines the direction and essence of any research plan. In this research, the
research approach starts from reviewing the literature. After reviewing the literature, some gaps
are to be identified and these gaps are the sources of the research being done. Based on these
gaps, the researcher frames the objectives and hypotheses. In this research, the researcher
adopts the descriptive, exploratory and causal research approach. The next stage of this
research is Research Model Development. In this stage, the researcher identifies the instrument
for this research and instrument which was the researcher selected was Questionnaire. After
framing the close-ended questionnaire, the researcher made a pilot study and got the valuable
feedback from the respondents. Based on the feedback from the respondents, the tabulation of
the data and the findings of the study has been made.
51
3.3 Research Design
A research design describes the method of conducting a research for the specific objectives
with a chosen research approach. Conventionally, three general research designs such as
Exploratory, Descriptive and Causal are adopted. In exploratory research design, first the
primary data is collected for the specific research and this data is used in an unstructured format
and to interpret this for the specific purpose. The basic use of exploratory studies is to
understand the particular phenomenon or to classify the basic problems. This type of study
does not provide the conclusive type of information. The second type of research design is
descriptive research design. This type of research design represents any type of research in
which the data is collected by scientific methods and also create the data structures to explain
the basic characteristics of the target population. In the causal research design, first thing is to
collect the primary data and then from this data, some structured information is created which
allows the researcher to frame some kind of cause and effect relationships for the decisions
variables.
The present study has adopted 'quantitative research approach' and 'descriptive research design'
as there are many respondents and information from each respondent has been obtained only
once. In the process of present research, a research framework has been prepared under various
major aspects of the investigation, which encompasses the decisions on defining the sampling
design, data collection and its analysis and then the interpretation of the analyzed data.
3.4 Sampling Design

The sampling design of the present study comprises of two stages, defining the population and
designing the sampling frame. In sampling design, there is a big role of the target population
and this represents a group of people from which the researcher can ask some structured
questions. If the researcher asks the questions from all the persons of the population, then it is
called as census and if the researcher collects data from some persons of the population, then
it is called as a sample of the population.
52
3.5 Significance of the Research
There are lots of challenges which affect the International and Indian market, out of several
challenges, the one challenge is global warming. To overcome this challenge, Kyoto Protocol
has been formulated. Now several concepts come into the picture, such as Carbon Credits
Trading (CCT), Clean Development Mechanism (CDM), Certified Emission Reductions
(CERs), etc. Now, these concepts are used to reduce the level of carbon emission from the
environment so that the temperature of the earth can be maintained. The research has therefore
focused on the following aspects:
▪ Study the concept of Carbon Credits Trading from the existing literature.
▪ Evaluation of Clean Development Mechanism in the developing country like India.
▪ Analyse the aspects considered by the manufacturing sector organizations for carbon Credits
Trading.
▪ Study the impact of present status of carbon credits trading with respect to the manufacturing
sector.
▪ Analyse the usage of different provisions for the purchased carbon credits by the organizations.
▪ Evaluate the different carbon credits trading practices adopted by the organizations.
▪ Identify the benefits which are gained by the organizations on implementing carbon credits
trading practices.
▪ Study the various challenges associated with implementation of carbon credits trading practices
in the organizations.
The points mentioned above are explained and supported to the significance of the research
and after considerations of the above points, the researcher plan the research hypotheses.
3.6 Population and Sample Size

This is the set of maximum people [Male and Female] to which the findings are to generalize.
Sample size of 51 respondents is selected for the study to make the study meaningful and
relevant.
53
3.7 Data Collection
Data collection can be classified under two main categories, such as classification of data based
on sources of collection and classification on the basis of the nature of data collection methods
from respective sources. In the present research primary data was collected through
quantitative data collection method by using the validated questionnaire.
3.7.1 Classification of data based on sources of collection

Based on the nature of the source of any data used in a research, it can be classified into primary
source and secondary source based. Primary source based data are those which are collected for
the first time, or we can say this should must be original in character. This type of data is
collected specifically for the present research problems, mainly by survey through structured
questionnaire. Secondary source based data are those which already have been collected by
someone else or we can say the data already have been passed through the statistical process.
The literature reviewed in the present study is the good example of collected secondary
information for preparing the foundation of the present research.
3.7.2 Classification on the Basis of the Nature of Data Collection

Methods from Respective Sources
There are two types of methods: qualitative and quantitative. The quantitative methods involve
statistical and numerical data obtained through surveys. The structured close ended
predetermined response option based questions are used along with some interpretation of any
doubt raised by the respondents, whereas qualitative method involves "soft" data in form of
open, unstructured, in-depth interviews, case studies etc. The present research has adopted the
quantitative method. The structured close ended questions were closely monitored. The other
rationale for adopting this method can be explained in the situation of present research
requirements. The research intends to estimate different trends on the issues covered under
study and the objectives of research have categorically stated about developing inferences
about facts, relations leading to the predictions. The survey was conducted through email,
personally and telephonically.
54
3.8 Editing and Tabulating
Since all the questions had fixed alternative responses based on nominal and ordinal scaling
method and had been pre-coded, little difficulty was evidenced in rendering the responses by
codes. The checking of the responses was a necessary step for improving quality of data for
coding purposes. In fact, the editing operations were simultaneously conducted throughout the
period of data collection. Once, the coding was over, tabulation through MS Excel sheets was
initiated. The tabulated data was then used for further analysis and the interpretations were
developed based on the finding of the analysis.
3.9 Data Analysis through Statistical Techniques

To analyse of the tabulated data, following statistical techniques have been used:
• Chi- square Method
3.9.1 Chi-Square Method

A chi-squared test, also written as χ2 test, is any statistical hypothesis test where the sampling
distribution of the test statistic is a chi-squared distribution when the null hypothesis is true.
Without other qualification, 'chi-squared test' often is used as short for Pearson's chi-squared
test. The chi-squared test is used to determine whether there is a significant difference between
the expected frequencies and the observed frequencies in one or more categories.
3.10 Classification and Tabulation of Data

Classification and tabulation of data were made according to the requirements of the research
work. The data which is collected through structured questionnaire has been classified with
respect to already defined different categories. At some places it has done in counting sheets
and at some places summary tables are prepared.
55
3.11 Interpretation of Data
Considering the objectives of the research, the data was interpreted and accordingly the
conclusions have been drawn. The interpretation of data, in this research, has been done in
various forms, such as bar diagram, pie chart, etc. In this research, some quantitative techniques
were also used for obtaining the accurate results.
3.12 Summary
This chapter has spelled out the research methodology adopted in the present study. It has been
started with an introduction to the concept of research and research methodology. It has also
discussed all relevant aspects of the research undertaken in the present study. The issues like
research approach, research design, sampling design, designing and testing of validity and
reliability of the survey questionnaire, data collection, editing and tabulating have been
discussed. Quantitative research approach has been adopted in the present study. The
population of the present study has also been defined and it is found that the sample size of 50
respondents. This chapter has also been discussed about statistical tools such as mean and
standard deviation, which are used in this study. The following chapter shall present the data
analysis, interpretation and presentations.
56
4. DATA ANALYSIS, INTERPRETATION
4.1 INTRODUCTION
Data analysis is considered to be an important step and heart of the research in research work.
After collection of data with the help of relevant tools and techniques, the next logical step, is
to analyse and interpret data with a view to arriving at empirical solution to the problem.
In this chapter, the captured data from the qualitative and quantitative research is presented,
analysed, described and interpreted in a systematic manner as the next step of the research
process. The documentation and analysis process aimed to present data in an intelligible and
interpretable form in order to identify trends and relations in accordance with the research aims.
In turn, the identified trends and relations in accordance with the research aims would enable
the researcher to know the mind sets of people towards policies and practices of carbon credits
trading for manufacturing sector in India.
Data collected from the respondents has been presented in the form of table and has been
converted in percentage form for proper analysis and interpretation. The same is shown with
the help of bar diagram and pie diagram for easy comprehension.
4.2 PROFILE OF RESPONDENTS:
Table No 4.1
Age Group of Respondents
PARTICULARS FREQUENCY PERCENTAGE (%)

18 to 25 25 50
26 to 35 14 28
36 and above 11 22
Total 50 100
Source: Field work
57
Graph no: 4.1
Age group of respondents
Source: Field work
INTERPRETATIONS:
• The above table 4.1 and graph 4.1 states that around 50% people come under the age group
of 18 to 25.
• 28% of people come under the age group of 26 to 35 and 22% people come under the age
group of 36 and above.
Table No.4.2
Gender of the respondents

Female 25 50
Male 25 50
Other - -
Total 50 100
58
Chart no: 4.2
Gender of Respondents
Source: Field work
INTERPRETATIONS:
• It can be observed that around 50% of respondents are male and 50% of respondents
are female.
Table No 4.3
Educational Qualification
Matriculation & below 2 4
Under graduate 5 10
Graduate 29 58
Post graduate 14 28
Total 50 100
Source: Field work
59
Chart No 4.3
Educational qualification of the Respondents
Source: Field work
INTERPRETATIONS:
• Most of the respondents were graduates i.e. around 58% followed by post graduates
being 28%.
• There were only 10% people who were under graduate and 4% of the respondents are
below matriculation.
Table No 4.4
Employment Status
Employed 34 68
Unemployed 11 22
Other 5 10
Total 50 100
Source: Field work
60
Graph No 4.4
Employment Status
Source: Field work
INTERPRETATION:
• Around 68% respondents are employed and 22% respondents are unemployed.
• The remaining 10% of the respondents comes under the category of others i.e. they may be
doing some sort of business.
61
4.3 ANALYSIS OF RESPODENNT’S INTERPRETATION ON
POLICIES & PRACTICES OF CARBON CREDITS TRADING IN INDIA.
Table No 4.5
Number of organization involved in Clean Development projects and Carbon

credit trading practices

Yes 24 48
No 15 30
Maybe 11 22
Total 50 100
Source: Field work
62
Chart No 4.5
Number of organization involved in Clean Development projects and Carbon
credit trading practices
INTERPRETATION:
• The above table 4.5 and graph 4.5 represent that about 48% of the organization studied in this
research, is involved in Clean Development Mechanism (CDM) projects and Carbon Credits
Trading (CCT) practices. This indicates that most of the organizations are taking interests in carbon
credits trading.
• About 30% of the organizations are not involved in any of the CDM projects & CCT practices
whereas 22% of the respondents are not sure whether their organization is actively involved in
CDM projects & CCT practices.
Table No.4.6
Source of information about carbon credits trading
Newspaper/ Advertisements 22 45.8
Workshops/ Conferences 10 20.8
Government Officials 12 25
Peer Organizations/ 4 8.3
Competitors
Total 48 100
Source: Field work
63
Graph No.4.6
Source of information about carbon credits trading
Source: Field work
INTERPRETATION:
• The above table 4.6 and graph 4.6 explain about the sources for the organizations regarding
awareness about carbon credits trading.
• The above table depicts that 45.8% of the respondents say that they came to know about
carbon credits trading through Newspapers/ Advertisements and 20.8% respondents
through Workshops/ Conferences.
• The above table also presents that 25% of the respondents say that they came to know about
carbon credits trading through Government Officials and 8.3% respondents through Peer
Organizations/ Competitors.
64
Table No 4.7
Number of years the organization has been involved in carbon credit trading

Less than a year 14 33.3
Between 1 & 2 years 9 21.4
More than 4 years 8 19
Total 42 100
Source: Field work
Chart No 4.7
Number of years the organization has been involved in carbon credit trading
Source: Field work
65
INTERPRETATION:
• The above table 4.7 and graph 4.7 explain the duration of the organizations which are
involved in carbon credits trading. The above table depicts that 33.3% of the respondents
told that the duration of their organization is involved in carbon credits trading is less than
one year and 21.4% respondents replied that the duration is between one and two years.
• It has been observed 54.7% organizations’ involvement is less than two years, so that
carbon credits trading is a newer concept.
• The above table also illustrates that the duration of two and three years; three and four years
and more than four years are 16.7%, 9.5% and 19% respectively.
Table No 4.8
Type of carbon credits that is/are frequently traded by the respondent’s
organization
Kyoto credit 4 6.3
Green power certificate 22 34.4
Domestic credit 17 26.6
Offset credit 11 17.2
Other voluntary credit 10 15.6
Total 100
Source: Field Work
66
Graph No 4.8
Type of carbon credits that is/are frequently traded by the respondent’s
organization
Source: Field work
INTERPRETATION:
• The above table 4.8 and graph 4.8 explain that the type of carbon credits that are most
frequently traded by the organizations. The above table depicts that 6.3% organizations
trade Kyoto Credits and 34.4% respondents say that they trade Green Power Certificate
type of Carbon Credits.
• The survey findings show that 26.6% of the respondents said that Domestic Credits type
of Carbon Credits trading is used more frequently by their organization.
• Nearly 17.2% of the respondents said that they trade more frequently Offset Credits type
of Carbon Credits and about 15.6% of the respondents said that they trade other voluntary
credits type of Carbon Credits.
67
Table No 4.9
Respondents’ opinion on whether trading of carbon credit is affected by the

geographical location

Strongly agree 7 14.6
Agree 24 50
Neutral 14 29.2
Disagree 3 6.3
Strongly disagree - -
Total 48 100
Source: Field work
Graph No 4.9
Respondents’ opinion on whether trading of carbon credit is affected by the
geographical location
68
Source: Field work
INTERPRETATION:
• The above table 4.9 and graph 4.9 explains that most of the respondents i.e. about 50%
agree that the trading of carbon credits is affected by geographical location whereas about
29.2% of the respondents don’t have any opinion i.e. they have a neutral view about the
trading of carbon credits is affected by geographical location.
• 14.6% of the respondents strongly agree whereas 6.3% of them disagree to the fact that the
trading of carbon credits is affected by geographical location.
Table No 4.10
Respondents’ opinion on whether the number of products manufactured
by an organization does not affect the level of carbon credits traded by the
organization
Strongly agree 5 10
Agree 14 28
Neutral 20 40
Disagree 9 18
Strongly Disagree 2 4
Total 50 100
Source: Field work
Chart No 4.10
69
Respondents’ opinion on whether the number of products manufactured by an
organization does not affect the level of carbon credits traded by the organization
Source: Field work
INTERPRETATION:
• It has been observed from the above frequency table no 4.10 and chart no 4.10 that most of the
respondents i.e. about 40% have a neutral view about the trading of carbon credits are affected by
the economies of scale.
• Only 14% of the respondents think that the trading is effected by the economies of scale and they
are absolutely right about it. The number and type of products manufactured by an organization
affects the level of carbon credits trading. This means that there is a direct relation of carbon
emission with the quantity of products manufactured. If the quantity of products increases then the
level of carbon emission will also increase. Therefore, organizations have to identify the ways for
reducing the level of carbon emission.
• The other respondents view are as follows:
About 18% disagree, 10% strongly agree and 4% strongly disagree to it.
70
Table No 4.11
Respondent’s opinion on whether carbon credit trading practices reduce the emission
of greenhouse gases to protect the environment from its pollution

Strongly disagree 5 10
Disagree 2 4
Neutral 21 42
Agree 16 32
Strongly agree 6 12
Total 50 100
Source: Field work
Graph No 4.11
Respondent’s opinion on whether carbon credit trading practices reduce
the emission of greenhouse gases to protect the environment from its pollution
Source: Field work

71
INTERPRETATIONS:
• It has been observed from the frequency table no 4.11 and graph no 4.11 that 42% of the
respondents have a neutral view, whereas 32% agree that the carbon credit trading practices
reduce the emission of greenhouse gases to protect the environment from its pollution.
• The other respondents view are as follows:

About 12% strongly agree, 10% strongly disagree and only 4% disagree that the carbon
credit trading practices reduce the emission of greenhouse gases to protect the environment
from its pollution.
Table No 4.12
Respondents’ thoughts on whether Carbon credit trading practice helps in

sustainable development
Strongly disagree 4 8
Disagree 3 6
Neutral 11 22
Agree 24 48
Strongly agree 8 16
Total 50 100
Source: Field work
Chart No 4.12
Respondents’ thoughts on whether Carbon credit trading practice helps in
sustainable development
72
Source: Field work
INTERPRETATIONS:
• It has been observed from the frequency table 4.12 & chart no 4.12 that majority of the
respondents i.e. about 48% of them are agreeing with the statement.
• 22% have a neutral view about it whereas 16% of them strongly agree that carbon credit
trading practice helps in sustainable development.
• 6% of them disagree whereas 8% strongly disagree with the above statement.
73
Table No 4.13
Steps taken by the organization for reducing the carbon emission
PARTICULARS FREQUENCY PERCENTAGE

(%)
Recycling 21 42
Dumping 5 10
Burning 1 2
Reducing 11 22
Reusing 12 24
Total 50 100
Source: Field Work
Graph No 4.13
Steps taken by the organization for reducing the carbon emission
74
INTERPRETATIONS:
• The above table 4.13 and graph 4.13 explain the appropriate steps taken by the
organizations to reduce the amount of carbon emission.
• The above table depicts that 42% respondents said that they recycle the waste and
10% said that they dump the waste material.
• The survey findings show that 24% organizations are reproducing the products and
22% organizations replied that they reduce the quantity of those materials during
manufacturing which are responsible for carbon emission.
• The above table also illustrate that only 1%of the respondents said that the step
taken for reducing the carbon emission was burning.
Table No 4.14
Activities undertaken by the organization for the conservation of eco system
Water harvesting 26 52
Planting trees 38 76
Treating Solid waste 21 42
Treating liquid waste 13 26
Source: Field Work
Graph No 4.14
Activities undertaken by the organization for the conservation of eco system
75
Source: Field Work
INTERPRETATION:
• The above table 4.14 and graph 4.14 explain the appropriate steps taken by the
respondents to conserve the eco system.
• The above table depicts that 76% of the respondents said that they plant the trees and
52% said that their organization harvests the rain water.
• The survey findings show that 42% of organizations treat their solid wastes and 26%
organizations replied that they treat their liquid wastes in order to conserve the eco
system.
Table No.4.15
Number of organization that ensures that they manufacture the products in an
environment friendly manner
76
Yes 36 72
No 4 8
Maybe 10 20
Total 50 100
Source: Field Work
Chart No.4.15
Number of organization that ensures that they manufacture the products in an

environment friendly manner
Source: Field Work
77
INTERPRETATION:
• It has been observed from the above frequency table 4.15 and chart no 4.15 that about
72% of the respondent’s states that their organization ensures to produce environment
friendly products where as 20% think that maybe their organization produce
environment friendly products.
• 8% of the respondents organization don’t produce environment friendly products to
conserve the environment.
Table No. 4.16
Whether the respondents’ organization has a well-defined emission reduction

plan or not

Yes 25 50
No 5 10
Maybe 20 40
Total 50 100
Source: Field Work
Graph No. 4.16
Whether the respondents’ organization has a well-defined emission reduction

plan or not
78
Source: Field Work
INTERPRETATION:
• According to the frequency table no 4.16 and graph no 4.16 50% of the respondents
organization has a well-defined emission reduction plan whereas 40% are not sure
whether their organization has a well-defined emission reduction plan or not.
• 10% of the respondents do not have any sort of well-defined emission reduction plan
in their organization.
Table No 4.17
Respondent’s opinion on whether carbon credit trading offers additional

revenue to the organization or not
79
Yes 22 44
No 9 18
Maybe 19 38
Total 50 100
Source: Field work
Graph No 4.17
Respondent’s opinion on whether carbon credit trading offers additional

revenue to your organization or not
Source: Field work
80
INTERPRETATIONS:
• Around 44% of the respondents think that trading of carbon credits have generated an
additional income to their organization.
• About 38% of the respondents think that most probably their organization may be
earning some extra income because of the trading of carbon credits.
• Only 18% of the respondent’s think that their organization doesn’t earn an additional
income by trading with carbon credits.
Table No 4.18
Whether the organization has improved its market value due to the carbon
credit trading

Yes 25 50
No 6 12
Maybe 19 38
Total 50 100
Source: Field work
Chart No 4.18
Whether the organization has improved its market value due to the carbon
credit trading
81
Source: Field work
INTERPRETATIONS:
• It has been observed from the frequency table 4.18 and chart no 4.18 that 50%
respondents are agreeing with the above statement whereas 12% of the respondents
don’t agree.
• 38% of them are not sure whether carbon credit has improve the market value of
their organization.
4.4 TESTING OF HYPOTHESIS
H0: The trading of carbon credits does not vary with respect to the geographical location,
82
H1: The trading of carbon credits does vary with respect to the geographical location, economies
of scale, etc.
H0: Carbon credits trading practices do not provide any help in waste management for protecting
the environment and sustainable development.
H1: Carbon credits trading practices do provide help in waste management for protecting the
environment and sustainable development.
The respondents’ response was used to test the hypothesis. The researcher adopted responses
to 4.9 and 4.12 to test the hypothesis as they are key to effective management decision making.
Table 4.4.1 Determination of observed frequency

VARIABLES 4.9 4.12 Row total
Strongly agree 7 8 15
Agree 24 24 48
Neutral 14 11 25
Disagree 3 3 6
Strongly disagree 0 4 4
Total 48 50 98
α= 0.05, Degree of Freedom (d.f) = n-1 = 5-1 = 4
Table 4.4.2: Computation: Using extract from table 4.4.1
Variables Respondents E (O-E)2 (O-E)2

size E
(O)
Strongly Agree 15 19.6 21.16 1.080
Agree 48 19.6 806.56 41.151
Neutral 25 19.6 29.16 1.487
Disagree 6 19.6 184.96 9.437
Strongly 4 19.6 243.36 12.416
Disagree
Total 98 65.571
83
The expected value is calculated by computing the mean of respondent size that is:
E = 15+48+25+6+4 = 19.6
Hence the table 4.4.2
X2 = ∑ (0 – E)2
= 65.571
Critical Value of x2 = 9.488
❖ DECISION RULE
Since 65.571 > 9.488 therefore, H0 is rejected. The calculated x2 value of 65.571 is
greater than the critical value of 9.488 therefore; there is enough statistical evidence to
reject the null hypothesis. The decision rule thus is to reject the null hypothesis and
accept the research hypothesis as seen from the above chi-square.
4.5 CONCLUSION
This chapter consists of the findings of the questionnaire and it also provides the status
of the hypotheses whether it have been accepted or rejected. In this chapter, the majority
of the respondents are agreeing with the given statement but in some questions, like
carbon credits’ trading helps in generating the funds and income generated from carbon
credits trading decreases the environmental pollution, respondents are neutral. The
following chapter presents the results and discussion of the above findings.
84
5. FINDINGS, CONCLUSIONS AND SUGGESTION
5.1 FINDING OF THE STUDY
The results and discussion section present the results of the research findings which are
detailed in the previous chapter. Major findings are:
▪ Of all the respondents maximum respondents belong to the age group of 18 to 25 years.
▪ Of all the respondents most of them were graduates i.e. around 58%.
▪ Of all the respondents most of them were employed i.e. about 68%.
▪ According to the present research, the results show that about 48% of the organization studied
in this research, is involved in Clean Development Mechanism (CDM) projects and Carbon
Credits Trading (CCT) practices. This indicates that most of the organizations are taking
interests in carbon credits trading.
▪ The maximum source of awareness about carbon credits trading is through newspaper and
advertisements. Peer organizations or competitors, workshops or conferences and various
government officials are also good medium to create awareness of carbon credits trading.
▪ According to the present study, the duration of involvement by organizations in carbon credits
trading is less than a year. This shows that it is a newer concept in India.
▪ According to the above research, the carbon credits’ trading is not affected by the geographical
location of the industry.
▪ The types of carbon credits that are most frequently traded by the organizations are generally
green power certificate, but some organizations have also selected Kyoto credits.
• According to the present research, it is concluded that most of the organizations are involved
in carbon credits trading for environmental protection and earning additional revenue. But they
are also willing to increase their market share value.
▪ The type of operation, products produced and quantity of products manufactured by an

organization affect the level of carbon credits trading. This means that if the product emits
85
more carbon in the atmosphere, then companies have to focus on carbon reduction techniques.
So, organizations will take more interest in carbon credits trading.
▪ There has been a positive impact of carbon credits trading practices which are adopted by the
organizations. Most of the organizations have been trying to develop the various products in
an environment friendly manner. They also adopt various strategies to calculate its carbon
footprint and greenhouse gases inventory but they don’t have a well-defined emission reduction
plan.
▪ For reducing the amount of carbon emission by the organizations, they have initiated the
process such as recycling, dumping, reproducing, reducing and disposing. These are the
appropriate steps for reducing the level of carbon emission from the atmosphere.
▪ There have been many benefits gained by the organizations on implementing carbon credits
trading practices. The main benefit of carbon credits trading has been the improvement in social
status of the organizations. The carbon credits’ trading has offered additional revenue to the
various organizations and in return organizations could use these funds for research and
development purpose. The carbon credits’ trading has also increased the overall market share
value of the organizations. .
▪ The results show the positive impact of carbon credits trading practices on the environmental
pollution and other aspects such as social responsibility, waste management, sustainable
development, etc. Carbon credits trading has reduced the emission of greenhouse gases,
increased social responsibility among organizations and decreased environmental pollution.
This research also shows that the income which has been generated from carbon credits trading
has also decreased the environmental pollution by investing these funds in various carbon
reduction projects. Carbon credits trading practices provide a significant help in waste
management and sustainable development.
86
5.2 CONCLUSION OF THE STUDY
The present research has several findings which are directly and indirectly related to the
society. These findings are having some contributions to our society and the researcher explains
some contributions in the following ways i.e. Carbon Credits Trading helps to reduce the
carbon emission significantly. Therefore, the best contribution of this concept is that society
has got a pollution free environment.
This concept provides a new trade in the system and many organizations are having future plan
to invest huge funds in different carbon reduction projects. Therefore, lots of opportunity will
create in the market and unemployment will be reduced. Global warming is now a huge threat
to the society and this concept is directly related to the carbon emission reduction. Therefore,
society has to sustain an ecological balance in the environment.
Carbon Credits Trading provides lots of opportunities for the global investors to invest their
funds. Therefore, foreign investors invest a significant amount of their funds in different
projects in India; this investment will provide some indirect help to the society in the form of
other businesses development. At Last, this concept will also encourage the people in societal
activities like tree plantation which would help reduce soil salinity, improve water and air
quality and enhance biodiversity, reduction in use of carbon emission equipment’s as much as
possible in daily life, etc.
The above points explain that the concept of carbon credits trading will contribute to our society
in a significant manner. Therefore, this research also encourages the organizations that they
should consider this concept in routine business
87
5.3 RECOMMENDATION AND SUGGESTION
In the light of foregoing analysis, findings and observations, some broad suggestions have
been recommended to the government and organizations. The present research has
indicated some of the facts about carbon credits trading for the manufacturing sector in
India. So based on these observations, some specific suggestions are as follows:
1) The carbon credits’ trading is still a new concept in India. So government should initiate
some workshops, conferences and advertisement campaign for spreading the awareness
about carbon credits trading.
2) Several organizations are interested in carbon credits trading, but they hesitate in this
trading because they think that it is quite complex. Hence workshops, regarding carbon
credit trading, must be organized.
3) The environmental rules and regulations in India are quite tough to understand; so the
related authorities have to design some easy rules and regulations, so that the
manufacturing organizations can easily understand and followed.
4) During the research, the researcher identified that presently in India, there may be no law
related to carbon credits trading. So, Government of India should create some laws related
to carbon emission reduction.
5) According to this study, the trading of carbon credits is not affected by the economic status
of the country; that might be the main reason of the involvement of developing nations in
Carbon Credits Trading. But, developing countries, especially India, need more efforts in
this type of trading.
6) The present research shows that the trading of carbon credits is not affected by the
industrial background of that country. So, there are lots of improvements such as taxation
system, awareness, benefits, etc. are required in that area.
7) With reference to the above research, most of the organizations are involved in carbon
credits trading for earning additional revenue and to increase their share market value. So,
related officials should support these types of organizations for earning more revenue from
carbon credits trading.
8) As per the present study, the type of operations, geographical location and number of
products manufactured by an organization affect the level of carbon credits trading while
as size, financial position and core competency of an organization do not affect the level
88
of carbon credits traded by the organizations. This shows that the organizations having
small size and less financially sound can also take some benefits from this type of trading.
So, small size and less financially sound organizations should also take interest in carbon
credits trading.
9) The present research shows that the basis for the adoption of carbon credits trading
practices in the organizations is to manufacture a product in an environment friendly
manner and also to support the business activities such as investment in clean development
mechanism. So, the researcher suggests that this type of organizations may take some
interests in project-based carbon credits because this type of trading would provide some
additional revenue.
10) The organizations should initiate the process of recycling, dumping and reusing to control
the amount of carbon emission. So, this type of activity must be carried out as general
practice by the organizations.
11) The present study also shows that most of the organizations have accounted their carbon
credits revenues as other income. So, these types of organizations have to pay some taxes
to the government. So, government should initiate some campaign for the betterment of
the environment.
12) This research already shows that financial and non-financial benefits are gained by the
organizations through implementation of carbon credits trading practices. So, with the help
of advertisement campaign, more organizations may be motivated for this type of trading.
13) This research shows that the major challenges, associated with the implementation of
carbon credits trading practices in the organizations, are taxation issues and lack of proper
accounted standards. So the government must take some initiatives in terms of easy
approach in taxation and proper accounted standards.
14) This research also shows the positive impact of carbon credits trading practices on the
environmental pollution. Now organizations become more sensitive for reducing the level
of pollution from an atmosphere. So government should provide some additional benefits
for those types of organizations, which are involved in reducing the level of pollution.
15) The concluded suggestion is that government and organizations should take some
initiatives for the betterment of the Carbon Credits Trading and also take some positive
actions for improving the ecological balance in an environment of the nation.
89

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STUDY ON CARBON CREDIT TRADING

Supriya Sunaji Hanumanthkari

UNDER THE GUIDANCE OF

A PROJECT SUBMITTED IN PARTIAL

UNDER THE GUIDANCE OF

A PROJECT SUBMITTED IN PARTIAL

Signature of Faculty Guide Head of Department

I hereby declare that this project report submitted by me to Vidyalankar

Supriya Sunaji Hanumanthkari

My project on title “Study on Carbon Credit Trading Practices” has been a

This is to acknowledge Prof. Varsha Maheshwari under whose guidance I

I am also thankful to Prof. Trupti Naik, Assistant Professor, Department of

I am grateful to my MMS colleagues Sheetal Dahibavkar and Abhishek

Supriya Sunaji Hanumanthkari

Prof. Varsha Maheshwari

Master of Management Studies Department

Vidyalankar Institute of Technology, Mumbai

Dr. Amit Oak

Professor and Head

Topic 2: Review of Literature

Topic 3: Research Methodology Topic

Topic 4: Data analysis, Interpretation

Topic 5: Findings, Conclusions and Suggestions

1.2 Carbon-dioxide Emission of Top Countries

Sr. Country 2012 % 2013 % 2014 % 2015 %

1 China 10056756 28.760 10503137 29.444 107111037 29.684 10641789 29.510

(Source: ibid, 2016)

Project Based Allowance Based

Joint Implementation Clean Development International Emission

Emission Reduction Certified Emission Assigned Amount

(Based on: Kyoto Protocol, 2014)

• Joint Implementation (JI)

1.3.1. Joint Implementation (JI)

1.3.2 Clean Development Mechanism (CDM)

Clean Development Mechanism (CDM) allows a developed country, with an emission

International Emission Trading is an allowance based mechanism and in this trading,

The framework of Carbon Credits Trading is shown in figure 1.2.

1.4.1 Meaning of Carbon Credit

1 Carbon Credit = 1 Ton of Carbon Dioxide Reduction

Steps to Work out

Framework of Policy for Carbon Credits Trading

SUBMISSION OF THE PROJECT

MAKE PROJRCT DESIGN

HOST COUNTRY APPROVAL VALIDATION OF PROJECT

POSSIBLE REVIEW BY CDM REGISTRATION WITH THE

ISSUANCE OF CERS TO PROJECT PROJECT IMPLEMENTATION

INDIVIDUALS TRADING BANKS

1.4.7 Carbon Capture and Storage (CCS)

1.4.8 Procedure for obtaining Carbon Credits

➢ Identification of specific areas of a project where the emissions can be reduced.

1.4.9 Certification Requirements for Carbon Credits Trading

1.4.10 Economics of Carbon Credits

The economics of Carbon Credits is as follows:

➢ Assuming the economies of scale, this becomes an attractive model for

1.4.11 Carbon Trade Exchange (CTX)

1.4.11.1 Key Features of CTX

The key features of CTX are as below mentioned:

❖ The settlement and clearing of funds and credits is on immediate basis.

1.4.12. Actual Transaction: Example