Clean Delopment Mechanism,Carbon Trading

8/8/2019 Clean Delopment Mechanism,Carbon Trading

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A STUDY ON

Maqsud Yamin Mazumder(65)

Krishnashis Chakraborty(68)

Anwarul Hoque Laskar(76)


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y The Clean Development Mechanism (CDM) is

an arrangement under the Kyoto Protocol

allowing industrialised countries with agreenhouse gas reduction commitment.

y

The mechanism was formalized in the KyotoProtocol, an international agreement between

more than 170 countries.


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y Kyoto Protocol is an agreement made underthe United Nations Framework Convention onClimate Change (UNFCCC) under which theindustrialized countries will reduce their

collective emissions of greenhouse gases by5.2% compared to the year 1990.

y The most notable non-party to the Protocol is

the United States, which is a party to UNFCCC.


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Actually, CDM has two objectives:

Help developed countries meet their GHGemission reduction objectives in a cost-

effective way.

and

Contribute to sustainable development ofthe host country.


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y As of 1st March 2009, 1431 projects havebeen registered by the CDM Executive

Board as CDM projects. These projectsreduce greenhouse gas emissions by anestimated 220 million ton CO2

equivalent per year.


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y Many CDM projects have been initiatedaround the world for the destruction of HCFC-23. An example is that of a Plascon, Plasma arc

plant that was installed in Monterrey, Mexicoto eliminate of HCFC-23, a by product of theproduction of R-22 refrigerant gas.


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y Carbon credits are certificates issued tocountries that reduce their emission of GHG(greenhouse gases) which causes global

warming. Carbon credits are measured inunits of certified emission reductions (CERs).Each CER is equivalent to one tonne of carbondioxide reduction.

y Its rate stood at 22 Euros in April, fell to below7 Euros, before stabilizing at 12-13 Euros.


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y

Countries with surplus credits can sellthe same to countries with quantifiedemission limitation and reductioncommitments under the Kyoto Protocol.

y Developed countries that have exceededthe levels can either cut down emissions,or borrow or buy carbon credits from

developing countries.


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yThe majority of CERs(Certified

Emission Reductions) issued sofar has been from HFCdestruction projects.


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y Developing countries such as India,

Srilanka, Afghanistan, China, Brazil etchave no immediate restrictions underthe UNFCCC.

y This serves two purposes:

a) Avoids restrictions on growth.

b)They get money and technologiesfrom the developed countries


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y Carbon trading has brought a hugeopportunity for Indian companies.

y The World Bank has purchased CERs from 10

companies. Tata Steel, HLL, Jindal VijaynagarSteel, Essar Power and Gujarat FlurochemicalsLtd have specially designed projects to takeadvantage of the opportunity.

y Bharat Heavy Electricals Ltd is the only publicsector firm which is planning to approach theministry for approval.


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Major Indian Projects approved by UNFCCC-

y Gujarat Flurochemicals, Kalpataru PowerTransmission Ltd, the Clarion power project inRajasthan and the Dehar power project inHimachal Pradesh.

y Powerguda Village in Adilabad District,

Andhra Pradesh became the first village inIndia to sell carbon credits directly to theWorld Bank.


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y

Powerguda inA

dilabad districtA

ndhraPradesh has pioneered a sale to theWorld Bank for $645. The village wasselling 147 tonnes equivalent of saved

carbon dioxide credits. Powergudasclaim of having saved 147 MT of CO2 isbased on the bio-diesel they extracted

from 4500 Pongamia trees in theirvillage.


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y Companies can boost up their balancesheet by earning profit.

y They can sell a large number of CO2credits to developed countries like US,UK.

y Even some Indian villages have realizedthe opportunity and trading carbon

credits for a pretty good amount.


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Documents

Clean Delopment Mechanism,Carbon Trading