Carbon Trading as a CDM Strateg

7/28/2019 Carbon Trading as a CDM Strateg

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Page 1

Carbon Trading as a CDM

Strategy-Ram Kishor Verma

Environmental Science Deptt,

Dr.R.M.L Avadh UnivestiyFaizabad

Uttar Pradesh India



Page 2

The Constitution of India

• It is the duty of the state to, “protect and improve

the environment and to safeguard the forests and

wildlife of the country”

• It is the duty of every citizen, “to protect andimprove the natural environment including

forests, lakes, rivers and wildlife”

• It required Bhopal Gas Tragedy to make the

Government to realise its duty to pass

Environment Protection Act in 1986





Page 4

Global Warming: Wrong Direction

• Concernsabout global

warming

• Concern was

about the

increase in

temperature



Page 5

Corrected Agenda

• The Stockholm Convention,1995

• Governing Council of the United Nations

Environment Programme called fro Global

action against Persistent Organic Pollutants,

defined as, "chemical substances that persist

in the environment, bio-accumulate through

the food-web, and pose a risk of causingadverse effects to human health and the

environment”



Page 6

Earth Summit

• Held in 1992 in Rio De Janeiro

• Set up UNFCCC (United Nations Framework

Convention on Climate Change)

• Confronting anthropogenic interference with the

earth’s climate system

• Prevention of climate change through reductionof green house gases to 1990 levels by 2000

and a 5.2% reduction by 2008-12

• Common but differentiated responsibilities



Page 7

Kyoto Protocol

• Adopted in 11 December, 1997 in Kyoto,

Japan

• Brought into force from February 16, 2005

• Totally 192 countries ratified the Protocol

• The USA, the prime polluter of the world

has no intention of signing the Protocol



Page 8

Elements of Kyoto Protocol

• Divided the countries into Annex I

Countries and Annex II Countries

• Annex I include developed countries that

have obligations to reduce GHG emissions

to 1990 levels by 2000 and 5.1% below

1990 levels by 2008-12

• Annex II include developing countries not

having any such obligations



Page 9

Elements …….contd.

• Gases identified were carbon di oxide,

methane, nitrous oxide, sulphur

hexafluoride, hydrofluorocarbon and

perfluorocarbon

• Flexible Mechanisms: Clean Development

Mechanism: carbon credit and trading

• Joint Implementation for countries in

transition (Soviet Union, Central and

eastern Europe)



Page 10

Clean Development Mechanism

• A CDM Executive Board was set up

• It will assess and approve projects in

Annex II countries

• These projects will be awarded Certified

Emission Reduction

• Annex I countries can meet their GHGemission limitations by buying CERs

(measured in carbon credit)



Page 11

Carbon Credit and Trading

• One carbon credit is equal to one metric

tonne of carbon di oxide emission or one

metric tonne of burning up oil

• A trading mechanism is created for

determining the price on the basis of

supply and demand

• Industrial units in Annex I countries can

instal pollution control equipment or buy

the carbon credits from Annex II countries



Page 12

Obligations of Kyoto Protocol

• Green-Annex I countries-having obligation

• Red-Annex II countries-not having the obligation

• Yellow-In Transition countries-Joint Implementation

http://en.wikipedia.org/wiki/File:Kyoto_Protocol_Commitment_map_2010.png



Page 13

Ratification of Kyoto Protocol

• Green-Countries that have ratified the protocol

• Red-Refused to ratify

http://en.wikipedia.org/wiki/File:Kyoto_Protocol_participation_map_2009.png



Page 14

CDM Project Cycle

• Stages: Project Idea, Development,

Approvals, Validation, Registration and

Issue of CERs

• Finance: Debt, Equity, CER Forward

Buying or CER Spot Buying

• Price: Fixed Price, Floating Price and the

Combo



Page 15

Trading Mechanism



Page 16

Carbon Dioxide Emission



Page 17

Carbon di Oxide Emission

• The USA 25.2%

• China 15.2%

• Russia 6.7%

• Japan 5.4%

• India 4.4%

• Germany 3.7%

• U.K 2.4%

• Canada 2.3%• Italy 2%

• Mexico 1.7%

• France 1.6%



Page 18

Eligibility to Participate

• The country should have ratified the protocol

• The project should have calculated the assigned amount

of carbon emission

• Establish a national system for estimating emissions andremovals of greenhouse gases within the country.

• They must have in place a national registry to record and

track and must annually report such information to the

secretariat.

• They must annually report information on emissions and

removals (carbon sinks) to the secretariat.



Page 19

Indian Scenario

Top Energy Guzzlers Million mt

Thermal Power 160.3

Iron & Steel 36.1Cement 14.5

Fertilisers 12

Textiles 4.5 Aluminium 2.4

Pulp and Paper 1.4



Page 20

Indian Environment Laws• 1882:The Easement Act

allowed private use of ground

water and made all surface

water a state property

• 1927: Indian Forest Act

(Amended in 1984)-trnsit of

forest produce and the dutiesleviable

• 1948: The Factories Act:

(Amendment in 1987)-

application to hazardousprocesses

• 1970: The Merchant

Shipping Act: waste arising

from ships

• 1972: The Wildlife Protection

Act: (Amended in 1991)

• 1974: The Water(Prevention

and Control of Pollution Act)

• 1980: The Forest

(Conservation) Act

• 1981: The Air (Prevention

and Control) Act



Page 21

Indian Environment Laws…contd

• 1982: The Atomic Energy Act

..Radioactive waste

• 1986; The Environment

Protection Act

• 1988: The Motor Vehicles

Act: …hazardous waste

• 1991: The Coastal

Regulation

Zone…construction along

coastal line

• 1991: The Public Liability

Insurance Act …accidents

due to hazardous material

• 1999; The Environment

(siting for industrial projects)

Rules

• 2000: The Ozone Depleting

Substance (Regulation and

Control) Rules

• 2001: The Batteries

(Management and Handling)

Rules

• 2002: The Noise Pollution

Rules

• 2002: The Biological

Diversity Act



Page 22

Indian Authority

• Ministry for Environment and Forests is

the designated national authority

• Many companies have been registered as

carbon traders

• MCX has tied up with ECX for offering

Hedging and futures trading

• Both futures and OTC products are

introduced



Page 23

Carbon Traders in India

• Grasim Industries

Limited

• Tata Motors Limited

• Tata Steel Limited

• Tata Power Company

Limited

• Reliance Energy Limited• Indo Gulf Fertilizers

Limited

• Valera Global Limited

• Andhyodhaya Green

Energy Limited

• Indus Technical and

Finance Limited• Rajasthan Renewable

Energy Corporation

• Bajaj Financial ServicesLimited

• Blue Star Engineering

Services Limited



Page 24

Arguments in Favour of carbon

Trading• Polluting countries must be penalised

• Polluting countries should pay a price

• Projects in Annex I countries have an

option: Install pollution control equipment

or buy the carbon credit

• Enable the projects in developing

countries to partially finance the energy

saving plans



Page 25

Arguments Against……

• As Annex II countries have no obligations,

MNCs will go to these countries through

FDI

• Developed countries produce the goods

that are consumed in developing

countries-the user must be penalised than

the producer

• Obligations should be on all the countries

• Further temperature differential



Page 26

Future of Carbon Trading

• Looks Bleak

• The USA has convinced 13 industrialisednations to set up a new protocol after 2012

• The countries can have the arrangement

internally• The steam has gone out of the movement



Page 27

Alternative: Get out of Popular

Misconceptions

• Misconceptions are:

• Nuclear energy is safer than thermal

• Wind energy protects environment• All smoke is the same

• All the smoke is bad for the environment

• Clean environment through phenyl

• Clean water through chlorine



Page 28

Alteration of Business Models

• Miniaturising hydel projects

• Developing technology for smaller units of

production for local consumption

• Avoiding criss-cross movement of

transportation

• Actively encouraging research in fuel cells

• Hybrid automobiles with fuel cells being

one of the fuel



Page 29

Redefining Forest and Animal

Welfare

• Man-Animal co-existence

• Encourage usage of animals in

transportation• Killing of wild animals alone should be

banned

• Encourage rearing wild animals• Encourage private Tiger Farms along with

tiger national parks



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Carbon Trading as a CDM Strateg