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KYOTO PROTOCOL & STATUTE REGARDING ENVIRONMENTAL PROTECTION IN INDIALegal Environment Of Business

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Team Members

A G Jain Anita Prajapati Master Govind Pooja Chauhan Tanisha Singh Vikas Jindal

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Content

Global Warming & its Implication Kyoto Protocol Carbon Credit Global Trading System Indian perspective

Indian StatutePre Tragedy Rule of Strict And Absolute Liability Environmental protection Act

Bibliography

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Global Implication

The number of hurricanes has almost doubled in the last 30 years.

Malaria has spread to higher altitudes in places like the Colombian Andes, 7,000 feet above sea level.

The flow of ice from glaciers in Greenland has more than doubled over the past decade.

At least 279 species of plants and animals are already responding to global warming, moving closer to the poles.

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Deaths from global warming will double in just 25 years—to 300,000 people a year.

Global sea levels could rise by more than 20 feet with the loss of shelf ice in Greenland and Antarctica, devastating coastal areas worldwide.

Heat waves will be more frequent and more intense.

Droughts and wildfires will occur more often. The Arctic Ocean could be ice free in summer by

2050. More than a million species worldwide could be

driven to extinction by 2050.

Global Implication Contd..

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Main Reason

for

These Disasters

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Climate Change

Rapid Industrial Growth

Increased energy consumption

Increased CO2 and other GHG emissions

Global Warming due to increased concentration of GHG

Increased Sea Level

Changes in windand precipitation

Changes in Cropyields

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Kyoto Protocol

An amendment to the international treaty on climate change, assigning mandatory targets for the reduction of greenhouse gas emissions to signatory nations

Only Parties to the Convention that have also become Parties to the Protocol will be bound by the Protocol’s commitments. (by ratifying, accepting, approving, or acceding to it)

183 countries and one regional economic integration organization (the EEC) have ratified the Protocol to date.

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Time-Line

May 1992: UN FCCC* establishes framework for containing global warming

Dec 1997: Following intense negotiations in Kyoto (Japan), a protocol is agreed upon by over 100 countries

Feb 2005: 141 countries, including EU, Japan, Canada, and Russia sign the Kyoto Protocol and it gets ratified w.e.f. 16-Feb-05– The US remains a key non-signatory

The Kyoto Protocol sets legally binding targets for reducing green house gases (GHGs)– Developed countries have a target to reduce GHG emissions by 5.2%

below 1990 levels, by year 2012

– EU members committed to reduce their average emissions by 8 %

– India, China, and Brazil are classified as emerging countries and hence exempted from this protocol

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Green House Gases

Green house gases (GHGs) are gases that result in global warming Degree of warming caused by a specific GHG depends upon its CO2

equivalence (CO2e) 6 GHGs are regulated under the Kyoto Protocol

– Carbon dioxide (CO2)– Methane (CH4)– Nitrous oxide (N2O)– Hydrofluorocarbons (HFCs)– Perfulourocarbons (PFCs)– Sulphur Hexafluoride (SF6)

There are at least 25 other gases, including chloroform, CO, and water vapour that influence climate-change Above-mentioned six are key ones, that can be controlled by human

intervention with relative ease

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Global warming potential

Global warming potential (GWP) for the 6 GHGs are summarised below:

GHG : Global Warming Potential Hydrofluorcarbons (HFCs) : 140 – 11,700 Perfluorcarbons (PFCs) : 6500 – 9,200 Methane : 21 Nitrous oxide : 310 Sulphur hexafluoride : 23,900 Carbon dioxide : 1

GWP is the global warming impact that a GHG would have over a 100-year timeframe– By definition, CO2 is used as the reference benchmark, with GWP

of 1

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CARBON CREDIT

Carbon credits are certificates issued to countries that reduce their GHG emissionsOne credit = 1 tonne of CO2 (or CO2 equivalent)

reduced Surplus credits result when a country overshoots

its reduction target– These can be traded, with countries facing a shortfall in target able to buy and meet their targets– Carbon credit trading encourages emission reduction, provides financial incentives to those who do

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Kyoto Protocol Mechanism

The Protocol allows developed countries to reach their targets in different ways through “Flexibility Mechanism”

Joint Implementation (JI) Clean Development Mechanism (CDM) Emission Trading (ET)

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UNFCCC KP

PROJECT BASED

ALLOWANCE BASED

IET (Between Developed Countries)

JI (Between Developed Countries)

CDM (Developed & Developing Countries)

Assigned amountunits (AAU)

Emission ReductionUnits (ERU)

Carbon ReductionUnits (CER)

K P Mechanism Contd..

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1.International Emission Trading Emissions trading (ET) is a mechanism that enables

countries with legally binding emission targets to buy and sell emissions allowances among themselves

Each country has a certain number of emission allowances (amount of carbon dioxide it can emit) in line with its Kyoto reduction targets

The IET allows industrialized countries to trade their surplus credits on the international carbon credit market

K P Mechanism Contd..

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2. Clean Development Mechanism

Developed Countries

Developing Countries

Carbon Credits

Technology Transfer & project

Financing

CDM

K P Mechanism Contd..

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CDM Cont..

The purpose of CDM is reduce to emissions and also contribute to sustainable development in developing countries

The CDM is administered by the CDM Executive Board (CDM Board) which reports and is accountable to the Conference of Parties (COP).

A Carbon emission reduction (CER) is given by the CDM Executive Board

One CER is equivalent to one tonne of carbon dioxide reduced

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CER – Source of Generation

Industries like Agriculture Energy (renewable & non-renewable

sources) Manufacturing Metal production Mining and mineral production Chemicals Afforestation & reforestation

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3. Joint Implementation

Projects between industrialized nations to earn emission offsets

It is done because of geographical or cost implications

Emission reduction units (ERUs) created through joint implementation is treated in the same way as those from emissions trading

K P Mechanism Contd..

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GLOBAL TRADING SYSTEM

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European Union Emission Trading Scheme

The European Union Emission Trading Scheme (EU ETS) is the largest multinational, greenhouse emissions scheme in the world. It commenced trading in 2005

Under Kyoto EU committed to reduce 8% 1990 levels of emissions in 2008 to 2012

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EU ETS Cont..

The Kyoto protocol sets targets to countries The States list down the amount and method

of allocating allowances to facilities under NAP The total allowances granted = Kyoto target Determinants of demand Volumes are tracked by National registries Registries keep track of the allowance

ownership transfers

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Indian Scenario

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How Carbon Credit works?

An Example: British Petroleum in UK emitting more

than the accepted norms of UNFCCC Tie up with Subsidiary in India or China

Under CDM The credits arising out of the use of the

new technology are sold to counterparts in Europe

Thus a carbon credit market is created

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Carbon trading in India

Bilateral trade No fixed norms of emission reduction by

government. Potential Participants Registry

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Carbon Trading in India cont..

Multi Commodity Exchange of India Ltd. ( MCX) entered into a strategic alliance with CCX in September 2005 to initiate carbon trading in India.

Offers Mini version of ECX CFI & CCFE SFI The tie-up would provide immense scope and

opportunity for domestic suppliers to realize better prices for their carbon credits

India being a major supplier of carbon credits, the tie-up between the two exchanges is expected to ensure better price discovery of carbon credits

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India’s potential

India – Non Annexure I country, has a large scope in emissions trading

India and china together contribute to $5 billion of the global carbon trade estimated at $30billion

It is one of the leading generators of CERs through CDM Analysts forecast that its trading in carbon credits would

touch US$ 100 billion by 2010 Currently, the total registered CDM projects are more

than 300, almost 1/3rd of the total CDM projects registered with the UNFCCC

The total issued CERs with India as a host country till now stand at around 34 million, again around 1/3rd of the total CERs issued by the UNFCCC

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Benefits of Carbon Trading

Sellers and intermediaries can hedge against price risk

There is no counterparty risk as the Exchange guarantees the trade

The price discovery on the Exchange platform ensures a fair price for both the buyer and the seller

Players are brought to a single platform, thus eliminating the laborious process of identifying either buyers or sellers with enough credibility

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Provisions in Indian Statute Regarding protection of Environment

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Bhopal Gas Tragedy

In city ‘Heart Of India’ named Bhopal UCIL.. Exposing 520,000 people to toxic gases.. Over 22,000 people died..

Due to:The use of hazardous chemicals (MIC) instead of less dangerous ones

Storing these chemicals in large tanks instead of several smaller ones

Possible corroding material in pipelines Poor maintenance after the plant ceased production in the early

1980s Failure of several safety systems (due to poor maintenance and

regulations) Leads to:

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Pre Tragedy Indian Statute

The Water (Prevention and control of Pollution) Act, 1974

The Air (Prevention and control of Pollution) Act, 1981

Forest Conservation Act, 1980 The Wild Life Protection Act, 1972

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Rule Of Strict liability

Formulated by House of Lords in 1868 Continues to be in Force in India under

Article, 372 of Indian Constitution Available under Law Of Torts Rylands vs. Fletcher Case

Construction of Reservoir through independent Contractor

Old Disused Shaft were neglected on the site Resulting in flooding the adjacent coal mine

with water

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The Rule: “If a person brings on his land anything

which is likely to do Mischief if it escapes, He will be Prima Facie answerable for the damage cause by its escape even though he was not negligent”.

Rule to be Applicable Dangerous things Escape Non Natural use of land

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Exception to Strict Liability: Plaintiff’s Own Default Act Of God Consent of the Plaintiff Act of third Party Statutory Authority

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Post Tragedy : Rule of Absolute Liability

Due to failure of Rule of Strict Liability for its exception

M. C. Mehta vs Union of India case. By Supreme Court in 1987 The Rule:

“When an enterprise is engaged in a hazardous or inherently dangerous industry which posses a potential threat to the health and safety of people, it owes an absolute and non-delegable Duty to ensure that no harm results to anyone from such activity”.

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Environmental Law & Consitution Of India

Specific Provision for Environmental protection Article 19(1)(g)3

Article 214

Article 475

Article 48A6

Article 51A(g)7

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THE ENVIRONMENT (PROTECTION) ACT, 1986

Scope and Scheme of the Act Come into force on 19 Nov 1986 Extends to whole of India Fixes responsibility on person’s carrying on

Industrial operations or Handling Hazardous substances

To comply with certain Safety norms for prevention, control and abatement of Environmental pollution.

Granted power to Central Govt. for environmental protection

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Bibliography

http://www.bbcnews.com http://www.ssrn.com http://www.karvy.com http://www.headwaycapitaladvisor.com http://www.baker&mckenzie.com http://www.ccnnews.com Economic Labour & Industrial law by ICSI Economic law by V.S.Datey

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Queries

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Thank you