CARDON

TRADING
AND
CARBON
FOOTPRIN
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 CONTENTS
• CARBON TRADING
• BENEFITS OF CARBON TRADING
• CARBON OFFSET
• DISADVANTAGES OF CARBON TRADING
• CARDON TRADING IMPLEMENTATION MECHANISMS

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 CARBON TRADING
• It refers to buying and selling of carbon credits that have been either
distributed by a regulatory authority or generated by GHG emissions
reduction projects.
• In cap & trade mechanism a regulatory authority limits (cap) the amount
of GHG to be released over a period of time. If organizations have a
shortfall or surplus in GHG allowances, they can engage in trade
with each other.
Company A Company B
Allotted : 10 carbon credits 12 Carbon credits
Used : 8 carbon credits 14 carbon credits
2 carbon credits not used 2
carbon credits overuse
Here company A can sell 2 carbon credits to company B for
financial benefit.

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 CARBON OFFSET
• Carbon credits are typically measured in tones of CO2-equivalents (or
CO2e) and are bought and sold through number of international brokers,
online retailers and trading platforms.
• Carbon offsetting is any reduction of greenhouse gas (GHG) emissions to
make up for emissions that occur elsewhere.
• Carbon offset credits show that an organization or person has reduced its
emissions.
• The term carbon offset is used to describe both the credit and the act of
carbon off setting.
• A carbon offset credit represents an emission reduction of 1 metric ton of
carbon dioxide. The goal of carbon offsetting is to reduce all or a portion
of a carbon footprint.

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 BENEFITS OF CARBON TRADING
REDUCTION IN GREEN HOUSE GAS EMISSIONS
Stringency in the cap or the upper threshold limit is contributing to lower
emission over the years
SOURCE OF REVENUE FOR DEVELOPING NATIONS
Developing nations can earn revenue by selling carbon credits to countries
with more fossil fuel demand.
SUPPORTS A FREE MARKET SYSTEM
The carbon trade market is without any economic intervention and
regulation by government except to regulate against force or fraud
IMPETUS FOR ALTERNATIVE SOURCES OF ENERGY OR GREEN
TECHNOLOGY
Threshold limits encourages industries to harness alternative sources of
energy and invest in green technology globally or in indigenous research.

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 DISADVANTAGES OF CARBON TRADING
RIGHT TO POLLUTE
Industries in the ratified nations are purchasing legal rights to pollute the
atmosphere
SLOW PROCESS
Industries are opting the easy way-purchase more allowances than
implementing greener technologies
LACK OF CENTRALIZED SYSTEM OR GLOBAL FRAMEWORK
Absence of a centralized and accepted global standards/act are missing
NO EFFECTIVE CARBON REDUCTION IN THE ATMOSPHERE
Leads to carbon reduction in one place and results in carbon emission in
some other place

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 CARBON TRADING IMPLEMENTATION
MECHANISMS
EMISSION TRADING (ET)
Countries whose emissions are less than their assigned amount can sell the
excess amount to countries whose emissions have exceeded their assigned
amount
The Assigned amounts can be defined as a tradable allowances, or
commodity, and this free market is known as the "CARBON MARKET.“
CLEAN DEVELOPMENT MECHANISM (CDM)
Developed countries can fund emission reduction projects (e.g. Solar
energy, wind energy and other green technologies) in developing nations
that did not sign Kyoto Protocol.
In exchange, the developed countries earn legally recognized emission
credits called CERS (Certified Emission Reduction) to offset their emission
obligations.
JOINT IMPLEMENTATION (JI)
Developed countries can implement emission reduction projects in another
developed or developing country and earn Emission Reduction Units
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(ERUS)ERUS
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can be used to meet the carbon allowance or can be
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