Transcript gp 21 Indian Village in Carbon Trading

Welcome
To
Presentation
On
Indian Village In Carbon Trading
What do you Understand by Carbon Trading
(Emission Trading) ?
It is the trading of permits to
emit carbon dioxide (and other
greenhouse gases, calculated in
tonnes of carbon dioxide
equivalent, tCO2e). It is one of
the ways countries can meet
their obligations under the
Kyoto Protocol to reduce carbon
emissions and thereby mitigate
global warming
EMISSIONS
BROKERAGE
GROUP
Greenhouse Gas
It is an administrative
approach used to control
pollution by providing economic
incentives for achieving
reductions in the emissions of
pollutants.
What Is Emissions Trading?
What options are most cost-effective?
Company A can reduce
1000 tons CO2 E at
$2/ton = $2000
SELL
Company B can reduce
1000 tons CO2 E at
$6/ton = $6000
BUY
1000 tons CO2 E at $4/ton
= $4000
$2000 Profit
Company A - Seller
$2000 Savings
Company B - Buyer
MARKET
AN AL YSIS
www.economist.com/images/20050709/CFN220.gif
It is also called Cap & Trade ….
 Here sets a limit or cap on
the amount of a pollutant that
can be emitted. Companies or
other groups that emit the
pollutant are given credits or
allowances which represent
the right to emit a specific
amount. The total amount of
credits cannot exceed the cap,
limiting total emissions to that
level. Companies that pollute
beyond their allowances must
buy credits from those who
pollute less than their
allowances. This transfer is
referred to as a trade.
http://www.euromoneyenergy.com/pdfs/ECK145.pdf
What is Kyoto Protocol ?
From December 1 through 11, 1997, more
than 160 nations met in Kyoto, Japan, to
negotiate binding limitations on greenhouse
gases for the developed nations, pursuant to the
objectives of the Framework Convention on
Climate Change of 1992. The outcome of the
meeting was the Kyoto Protocol, in which the
developed nations agreed to limit their
greenhouse gas emissions, relative to the levels
emitted in 1990.
It Entry into Force on 16 February2005
Continues……
India Signed and ratified in August 2002
Ratified by >130 countries
Major non-participants: USA and Australia
Commits industrialised countries to
reducing their
greenhouse gas
emissions by, on average, 5% below 1990
levels in 2008-12
Individual, quantified emission targets for
each industrialized country
Six greenhouse gases covered: CO2, CH4,
N2O, HFC/PFC, SF6
European Union Emission Trading Scheme
The scheme, in which all 25 member states
of the European Union participate,
commenced operation on 1 January 2005
Under the scheme, each participating
country proposes a National Allocation Plan
(NAP) including caps on greenhouse gas
emissions for power plants and other large
point sources.
In the first phase (2005-2007), the EU ETS
includes some 12,000 installations,
representing approximately 45% of EU CO2
emission.
The second phase (2008-12) is to cover not
only CO2, but all greenhouse gases.
Carbon Trading Cycle
http://www.co2e.com/strategies/subsolutions.asp?intcategoryid=79
Understand the Principles
Assist you in identifying and
addressing these climate change
issues, the direction of policy
and their potential impacts on
your business.
Determine Emissions & Base Line
Assist in determining,
monitoring and reporting your
firm's emissions and baselines
and identifying internal
abatement opportunities.
Define Carbon Management Strategy
It offers strategic advice on how to achieve an effective
carbon management strategy in a manner that best fits
your risk profile, regulatory environment, capacity and
existing operations
Develop a Reduction
Project
It offers a choice of specialist
services to assist in developing
your emission reduction project
through
Joint Implementation
Clean Development
Mechanism
Verify & Monitor Emission Reduction
It provides independent greenhouse gas emission
verification services involving analytical review of a data
acquisition process, assessment and testing of internal
controls, and the validation of data.
Register Emission Reduction
provide independent registry services for emission
reductions.
Obtain Financial Advice
Obtain Insurance Advice
The most basic strategic analysis
needs to include a review of the
Financial Impact of Climate Change,
and sellers need CO2e Project
Financing Solutions together with
Structured Financial Solutions to
liberate hidden value from the
instruments themselves.
Insurance services provide enhanced security to your climate
change investments and marketability to your reductions. Risk
Optimization of Carbon Offset Projects and Trading should enable you
to avoid setbacks, reduce unnecessary exposures, provide access to
alternative sources of project finance and enhance the
competitiveness of your offers to sell emission reductions
Obtain Legal Advice
sellers need Integrated CO2e Project Advice, and buyers need to
understand the Legal Validity of Project Based Emission Reductions
which they may be buying.
The Market For Carbon Trading
In 1998 ----18mn tons CO2 traded
In 2004 ----107mn tons CO2 traded
In current year the volumes have already reached levels of
43mn tons of CO2 equivalent.
Buyers of Carbon Credits in 2003-04 & 2005(Jan-Apr)
40%
30%
20%
10%
0%
32%
30%
29%
22%
21%
16%
12%
6%
4% 3%
3% 1%
UK Ne Ja US Au Ca Ne Ot
str na w he
t he pan A
al i da Z e r E
rla
a
al a U
nd
nd
2003-04
Source -IETA
6%5% 7%
3%
2005(Jan-Apr)
sellers of carbon credits in 2003-04 and 2005
(Jan-April)
35%
31%
26%
30%
23%22%
25%
17%
14%
20%
15%
14%
13%
12%
10%
10%
Source-IETA
2005(Jan-Apr)
9%
6%
C
Ec
D
on
om
ic
s
O
E
on
Tr
an
si
ti
fL
B
ra
at
zi
in
Am l
er
ic
a
R
es
to
A
fr i
R
ca
es
to
fA
si
a
0%
3%
0%
In
di
a
5%
2003-04
Instances of Carbon Trading from India
Jangubai Self Help Group of Powerguda
Village in Adilabad District of Andhra
Pradesh sell the equivalent of 147 tons of
CO2 costs $645 from World Bank.
Jindal Vijaynagar Steel declaring to sell
$225 million worth carbon(15mtons co2)
over the 10 years through Corex Furnace
Technology.
Instances of Carbon Trading from India
As many as 12 Indian firms have been cleared
for "carbon trading", the Union Environment
Minister, T.R. Baalu said(1st july,2003)
Canara Bank has offered to provide cash
subsidy for solar water heater installations by
trading certified emission reduction with 37
industrially advanced countries under the Kyoto
Protocol, individuals in India can sell their
reduction of carbon emissions with the help of
the government so that the developed countries
can emit that much more pollution.
Way Ahead
Overall objective is to Link to United
Nation's Millennium Development Goal -7
“Ensure Environmental Sustainability”
Integrate the principles of sustainable
development into country policies and
programmes.
Appendix
 Clean Development Mechanism (CDM) is a way to
earn credits by investing in emission reduction projects in
developing countries. International Emissions Trading
(IET) will permit developed countries that have taken on
a Kyoto target to buy and sell credits among themselves
Joint Implementation (JI) is a project-based
mechanism developed under the Kyoto Protocol (KP),
designed to assist some countries in meeting their
emission reduction targets through joint projects with
other countries, meaning that JI projects can only be
implemented between capped industrialised countries.
One or more investors (Governments, companies, funds
etc) will agree with partners in a host country to
participate in project activities which generate Emission
Reduction Units (ERUs) , in order to use them for
compliance with targets under the Kyoto Protocol
References
www.economist.com/images/20050709/CFN220.gif
http://www.euromoneyenergy.com/pdfs/ECK145.pdf
http://www.co2e.com/strategies/subsolutions.asp?intcat
egoryid=79
IETA
http://en.wikipedia.org/wiki/Greenhouse_gas
http://www.goodnewsindia.com/index.php/Supplement/
article/320/
http://www.downtoearth.org.in/new_letter.asp?folderna
me=20060131&sec_id=1
http://www.telegraphindia.com/1060522/asp/business/s
tory_6253493.asp
Thanks for
Co operating
Purnendu Bikash Giri
Roll No-----32