Subject - Carbon credit

What does Carbon Credit mean?

A permit that allows the holder to emit one ton of carbon dioxide; Credits are awarded to
countries or groups that have reduced their green house gases below their emission quota.

ts goal is to stop the increase of carbon dioxide emissions. The Kyoto Protocol presents nations
with the challenge of reducing greenhouse gases and storing more carbon. A nation that finds it
hard to meet its target of reducing GHG could pay another nation to reduce emissions by an
appropriate quantity. The carbon credit system was ratified in conjunction with the Kyoto
Protocol.

For example, if an environmentalist group plants enough trees to reduce emissions by one ton,
the group will be awarded a credit. f a steel producer has an emissions quota of 10 tons, but is
expecting to produce 11 tons, it could purchase this carbon credit from the environmental group.
The carbon credit system looks to reduce emissions by having countries honor their emission
quotas and offer incentives for being below them.

What is Carbon Trade?
An idea presented in response to the Kyoto Protocol that involves the trading of greenhouse gas
(GHG) emission rights between nations.
For example, if Country X exceeds its capacity of GHG and Country Y has a surplus of capacity,
a monetary agreement could be made that would see Country X pay Country Y for the right to
use its surplus capacity.

Credits versus Taxes
Credits were chosen by the signatories to the Kyoto Protocol as an alternative to Carbon taxes.
A drawback of tax-raising schemes is that, they are not frequently hypothecated, and so some
or all of the taxation raised by a government may be applied inefficiently or not used to benefit
the environment.
By treating emissions as a 'market commodity' it becomes easier for business to understand
and manage their activities, while economists and traders can attempt to predict future pricing
using well understood market theories. Thus the main advantages of a tradable carbon credit
over a carbon tax are:
1. the price is more likely to be perceived as fair by those paying it, as the cost of carbon is set
by the market, and not by politicians. nvestors in credits have more control over their own
costs.
2. the flexible mechanisms of the Kyoto Protocol ensure that all investment goes into genuine
sustainable carbon reduction schemes, through its internationally-agreed validation process.






ConcIusion

Carbon credits are now a key component of national and international emissions trading
schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by
capping total annual emissions and letting the market assign a monetary value to any shortfall
through trading. Credits can be exchanged between businesses or bought and sold in
international markets at the prevailing market price. Credits can be used to finance carbon
reduction schemes between trading partners and around the world.

There are also many companies that sell carbon credits to commercial and individual customers
who are interested in lowering their carbon footprint on a voluntary basis. These carbon off-
setters purchase the credits from an investment fund or a carbon development company that
has aggregated the credits from individual projects. The quality of the credits is based in part on
the validation process and sophistication of the fund or development company that acted as the
sponsor to the carbon project.

Carbon credits create a market for reducing greenhouse emissions by giving a monetary value
to the cost of polluting the air. Emissions become an internal cost of doing business and are
visible on the balance sheet alongside raw materials and other liabilities or assets. The ultimate
objective of regulating pollution through MBs is improved environmental quality.

1 ton co2 or ch4 , HFC , Nitrous oxide = 1 carbon credit = 22 euro ( Based on futures market in
MCX ( MULT COMMODTY EXCHANGE ) .



There are two carbon credit available
1. Carbon offset credit - Credit availed from nstalling Wind mill , biomass etc , which dont
emission gree house gases .
2. Carbon reduction credit- Credit availed from the action plan in industrial reduction of green
house gases emission thru , tree and forest development , ocean and soil collection and
storeage efforts .

The amount spend on green house emission control shall be 2500 crores by all developed
countries in this year may be very cheaper compared to effects on controlling famine in scarcity
of food grains , water scarcity shall be 200000 crores if temp is resulted by 2 deg rise . Chennai
coastal is above by mean sea level of only 2 mtr , chennaities may be forced to migrate ,
similarly kuttanadu in kerala , andaman nicobar islands all going to disappear . Very alarming
one .


more at http://www.citehr.com/304376-carbon-credit.html#ixzz1WJjGR1Dz



Carbon credit & Indian industry
by admin on August 27, 2006
CARBON CREDITS & INDIAN INDUSTRY
Carbon credits are certiIicates issued to countries that reduce their emission oI GHG (greenhouse
gases)
Trading in carbon credits:
In India, GHG emission is much below the target Iixed by the Kyoto Protocol and so, India is
excluded Irom reduction oI GHG emission. On the contrary, they are entitled to sell surplus
credits to developed countries.
In addition India is one oI the largest beneIiciaries, claiming about 31 oI the total world carbon
trade through the clean development mechanism (CDM), which is expected to rake in at least $5-
10 billion over a period oI time.
A corporate company oI India M/s Gujarat Fluro-Chemicals will Pocket Double Its turnover
through Carbon Credits sales.
Global warming due to green house gases has opened a new avenue Ior Indian companies to
make so much money that sometimes it is more than their annual turnover.
A recent sale oI carbon credit by Gujarat Fluro-Chemicals has created waves in Europe and
Japan where companies are desperate to reduce carbon emissions at their Iactories.
Low-proIile Gujarat Flurochemicals , which runs the largest reIrigerant plant in India, has a
agreed to sell carbon credits worth Rs. 1,000 crore over the next three years to Noble Credits oI
Singapore. The deal will rake in Rs. 350 crore Ior GFL in the Iirst year, sources said. The
windIall is nearly double the companyts sales oI Rs. 182 crore last year and more than 3.5
times its net proIit oI Rs. 96 crore.
An international agreement, known as the Kyoto Protocol, signed by 141 countries except the
U.S and Australia, has set emission caps Ior developed countries Ior 2008-2012. Companies
there can either reduce greenhouse emission to mandated levels every year or oIIset actual
emissions by buying carbon credits Irom companies operating in developing countries that
managed to reduce the level oI carbon dioxide.
GFLts transaction was also diIIerently structured. It has promised to sell halI oI the carbon
credits to Noble until 2012 at a minimum price oI $10 a unit. It can buy up to 35 at the market
price with a Iloor oI $10 a unit. GFL will be Iree to sell the rest in the spot market.

GFL, which makes reIrigerator coolant, accumulated the credits by burning waste gas by
installing a thermal oxidizer at its Gujarat Iactory. GFL reduces close to 12,000 tons oI
greenhouse gases (Carbon dioxide) daily, which adds up to 6 million tons annually.
Eco Securities, a global carbon credit trader, says this translates into millions oI carbon credits.
To gain one carbon credit, a company has to reduce one ton oI carbon dioxide emission.
Even though 70-80 projects have been registered at the United Nations Ior carbon credits in
India, the Rs. 1,000 crore deal is a record. Other companies that have already sold their carbon
credits include Kalpataru group, which runs a bio-mass based power project, and SRF which has
a hydro Iluro carbon plant.
Sources say each credit is sold at between $5 and $12 depending on risk Iactors, primarily
guaranteed supply. Large companies get a better price compared to smaller ones. Currently one
carbon credit trades at $10.
There are reasons Ior the mad rush Ior carbon credits. Governments in Europe, Canada and Japan
(the three main signatories oI the Kyoto Protocol) have set industrial greenhouse gas emissions
limits, the costs oI which reIlect on their companies balance sheets.
They have to invest large sums in technologies and processes to stick to government directives
on green house emissions. So they buy carbon credits to achieve their emission targets. Mostly
credits are bought Irom countries like China and India.
India is the biggest supplier oI carbon credits to the global market and to remain a leader in this
market one should understand the global dynamics oI the supply and demand. Indian companies
are buying their time Ior a better value but China and Brazil are also coming up with big volumes
thereIore India should time their deals t`well on timet.


more aL hLLp//wwwclLemancom/972carbonvredlLlndlanlndusLry/#lxzz1W!lzlfl






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Lhe growLh ln concenLraLlons of greenhouse gases (CPCs) Cne carbon credlL ls equal Lo one Lon of
carbon dloxlde or ln some markeLs carbon dloxlde equlvalenL gases Carbon Lradlng ls an appllcaLlon of
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allocaLe Lhe emlsslons among Lhe group of regulaLed sources 1he goal ls Lo allow markeL mechanlsms Lo
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approaches Lhan Lhose used when Lhere ls no cosL Lo emlLLlng carbon dloxlde and oLher CPCs lnLo Lhe
aLmosphere Slnce CPC mlLlgaLlon pro[ecLs generaLe credlLs Lhls approach can be used Lo flnance
carbon reducLlon schemes beLween Lradlng parLners and around Lhe world
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lnLeresLed ln lowerlng Lhelr carbon fooLprlnL on a volunLary basls 1hese carbon offseLLers purchase Lhe
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1hls ls reflecLed ln Lhelr prlce volunLary unlLs Lyplcally have less value Lhan Lhe unlLs sold Lhrough Lhe
rlgorously valldaLed Clean uevelopmenL Mechanlsm
lSC
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a nongovernmenLal organlzaLlon esLabllshed ln 1947 1he organlzaLlon malnly funcLlons Lo develop
volunLary Lechnlcal sLandards LhaL alm aL maklng Lhe developmenL manufacLure and supply of goods
and servlces more efflclenL safe and clean
WhaL are Lhe 17 requlremenLs of Lhe lSC 140012004 sLandard?
- LnvlronmenLal ollcy develop a sLaLemenL of Lhe organlzaLlon's commlLmenL Lo
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documenLs
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What are Carbon Credits? The Need istence/;olution Trading and Value Generation


Carbon credits are a tradable permit scheme. It is a simple, non-compulsory way to counteract the
greenhouse gasses that contribute to climate change and global warming. Carbon credits create a
market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air.
The Carbon Credit is this new currency and each carbon credit represents one tonne of carbon dioxide
either removed from the atmosphere or saved from being emitted. Carbon credits are also called
emission permit. Carbon credit is in the Environment and Pollution Control subject. Carbon credits are
certificates awarded to countries that are successful in reducing emissions of greenhouse gases.
Carbon credits are generated as the result of an additional carbon project. Carbon credits can be
created in many ways but there are two broad types:
1. Sequestration (capturing or retaining carbon dioxide from the atmosphere) such as
afforestation and reforestation activities.
2. Carbon Dioxide Saving Projects such as use of renewable energies
These credits need to be authentic, scientifically based and Verification is essential.
Carbon credit trading is an innovative method of controlling emissions using the free market.

Need for carbon credits

Over millions of years, our planet has managed to regulate concentrations of greenhouse gases
through sources (emitters) and sinks (reservoirs). Carbon (in the form of CO2 and methane) is
emitted by volcanoes, by rotting vegetation, by burning of fossil fuels and other organic matter. But
CO2 is absorbed, by trees, forests or by some natural phenomenon like photosynthesis and also
oceans to some extent.

In modern times the burning of fossil fuels like coal, oil and natural gas - in which carbon has been
stored for millions of years - combined with accelerated land clearance has led to exceptional levels of
greenhouse gas emissions. Vegetation, largely forest, is already absorbing about one-third of human-
induced emissions, planting more forests could increase absorption. Carbon sinks cant keep up, and
concentrations of greenhouse gases in the atmosphere have risen dramatically leading to an enhanced
greenhouse effect which will result in very rapid warming of the worlds climate. more...

istence of carbon credits

The concept of carbon credits came into existence as a result of increasing awareness of the need for
pollution control.
Carbon credits were one of the outcomes of the Kyoto Protocol, an international agreement between
169 countries. The Kyoto Protocol created legally binding emission targets for developing nations. To
meet these targets, nations must limit C02 emissions. It was enforced from Feb05.
The very phase "Kyoto Protocol has become synonymous with the idea of saving the planet from the
global meltdown.
This can be accomplished by either reducing emissions or by absorbing emissions through processes
such as tree-planting and sequestration. more...





Trading of carbon credits

Buying carbon credits is not a charitable donation, but a retail action. Trade in carbon credits has the
potential to make forestry more profitable and to sustain the environment at the same time.

One of the primary solutions for climate change being thought by global warming alarmists is the
purchase and sale of carbon credits. For trading purposes, one credit is considered equivalent to one
tonne of CO2 emissions. Credits can be exchanged between businesses or bought and sold in
international markets at the prevailing market price. more..

Value of carbon credits

Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the
cost of polluting the air such as carbon emitted by burning of fossil fuels. This means that carbon
becomes a cost of business and is seen like other inputs such as raw materials or labor.

Carbon credits are measured in tonnes of carbon dioxide.

1 credit = 1 tonne of CO2.

Each carbon credit represents one metric ton of C02 either removed from the atmosphere or saved
from being emitted. The carbon credit market creates a monetary value for carbon credits and allows
the credits to be traded.
For each tonne of carbon dioxide that is saved or sequestered carbon credit producers may sell one
carbon credit. more...

Generation of carbon credits

Many types of activities can generate carbon offsets. Renewable energy such as wind farms, or
installations of solar, small hydro, geothermal, and biomass energy can all create carbon offsets by
displacing fossil fuels. Other types of offsets available for sale on the market include those resulting
from energy efficiency projects, methane capture from landfills or livestock, destruction of potent
greenhouse gases such as halocarbons, and carbon sequestration projects (such as reforestation) that
absorb carbon dioxide from the atmosphere. more...
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