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Carbon Emissions Trading

This document discusses carbon credits and emissions trading. It explains that carbon credits were created as part of the Kyoto Protocol to limit greenhouse gas emissions. Countries and organizations are given emission allowances and can buy and sell unused allowances as carbon credits. This creates a market incentive for reducing emissions in a cost-effective way. The document also notes that some exchanges like the Multi Commodity Exchange of India have partnered with exchanges like the Chicago Climate Exchange to begin carbon trading in India.

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294 views

Carbon Emissions Trading

This document discusses carbon credits and emissions trading. It explains that carbon credits were created as part of the Kyoto Protocol to limit greenhouse gas emissions. Countries and organizations are given emission allowances and can buy and sell unused allowances as carbon credits. This creates a market incentive for reducing emissions in a cost-effective way. The document also notes that some exchanges like the Multi Commodity Exchange of India have partnered with exchanges like the Chicago Climate Exchange to begin carbon trading in India.

Uploaded by

bhavani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Trading in carbon credits

Bhavani Jade
Roll no - 7
Agenda
Introduction

Emission Allowances

Emissions Trading

Effect of Carbon Credits

Indian Context
Introduction
 Burning of fossil fuels is a major source of
industrial green house gas emissions. E.g. -
Power, cement, steel, textile, and fertilizer
industries .
 Increases the atmosphere's ability to trap infrared
energy and thus affect the climate.
 The concept of carbon credits came into existence
as a result of increasing awareness of the need for
controlling emissions.
 It was formalized in the Kyoto Protocol –
agreement between 169 countries.
Emission allowances
• The Protocol agreed 'caps' or quotas on the
maximum amount of Greenhouse gases that each
participating country can produce.
• In turn these countries set quotas on the
emissions of installations run by local business
and other organizations, generically termed
‘operators.’
• Each operator has an allowance of credits, where
each unit gives the owner the right to emit one
metric tonne of carbon dioxide or other equivalent
greenhouse gas.
Emissions Trading
• Emissions trading (ET) is a mechanism that
enables countries with legally binding emissions
targets to buy and sell emissions allowances
among themselves
• Operators that have not used up their quotas can
sell their unused allowances as carbon credits,
while businesses that are about to exceed their
quotas can buy the extra allowances as credits,
privately or on the open market
• The transfer of allowances is referred to as a
trade.
• For trading purposes, one allowance is considered
How buying carbon credits can
reduce emissions?
• Carbon credits create a market for reducing
greenhouse emissions by giving a monetary value
to the cost of polluting the air
• The buyer is being fined for polluting, while the
seller is being rewarded for having reduced
emissions
• Emissions become an internal cost of doing
business and are visible on the balance sheet
alongside raw materials and other liabilities or
assets
• By allowing allowances to be bought and sold, an
operator can seek out the most cost-effective way
of reducing its emissions, either by investing in
'cleaner' machinery and practices or by
Indian context
Multi Commodity Exchange of India Ltd. (MCX)
entered into a strategic alliance with Chicago
Climate Exchange (CCX) in September 2005 to
initiate carbon trading in India.
The European Climate Exchange (ECX), a
subsidiary of Chicago Climate Exchange (CCX),
remains the leading exchange.
THANK YOU

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