Bharat Entrepreneurs

What the heck is this?
It is an administrative approach used to control increasing CO2 by providing incentives in order to reduce the emission of pollutant.
Think about it for a minute - trading polluting gases!!

Still did not get it?
Let me try to describe this form of trading in simple terms. It aims to reduce pollution from harmful gases by regulating emission of carbon dioxide in air( another way to earn big bucks). A central authority fixes an upper limit on the amount of pollutant that can be emitted. If a firm pollutes less than the limit, it earns credit and can exchange this for cash. A firm which pollutes more than the limit can earn those credit by paying an equivalent amount of money in some exchange(market). This way it regulates the emission of CO2.
Suppose cap is 100 units. A firm X which pollutes equivalent to 90 unit of pollutant, earns 10 credit points. Another firm Y which consumes 110 units will need 10 units. It will enter into a trade (in presence of third party) where it will exchange 10 units with some cash. This form of trading is called carbon trading.

Background
On the initiative of UNO (United Nations Organisation), Kyoto protocol was signed in 11 December 1997 and it came into force from 16 December 2005. The Kyoto protocol aims to tackle global warming by setting target levels for nations to reduce greenhouse gas emission worldwide. The Kyoto protocol is an agreement by which the ratifying countries have agreed to reduce their emission of greenhouse gases. Under the protocol, initial target is to reduce greenhouse gas emission to 5.2 per cent below 1990 base level. 172 countries have signed the Kyoto Protocol. Australia has also recently ratified the protocol. These countries and their companies are the only ones allowed to engage in carbon trading.

Show me the money!
Carbon emissions trading has been steadily increasing in recent years. According to the World Bank’s Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO₂e) were exchanged through projects in 2005, a 240% increase relative to 2004 (110 mtCO₂e) which was itself a 41% increase relative to 2003 (78 mtCO₂e).In terms of dollars, the World Bank has estimated that the size of the carbon market was 11 billion USD in 2005, 30 billion USD in 2006, and 64 billion in 2007^. (source: wiki)
The value of the carbon trading market was around $30 billion in 2006 as per the estimates of the International Emissions Trading Association. Since 2002, a cumulative 920 tonnes of carbon dioxide equivalents have been transacted through CDM project activities. European buyers dominate the market, with 86 per cent market share as of 2006. On the selling side, India leads the race with 288 CDM projects registered followed by China with 129 projects as of November 2007 ( source: the hindu business line)

Opportunity
Lets come to the point now. India being a developing nation enjoys some freedom over the protocol. Companies can boost up their balance sheet by earning profit. They can sell a large number of CO2 credits to developed countries like US, UK. Once India is realized as a major pollutant, the opportunity to trade on large scale will seize. Even some Indian villages have realized the opportunity and trading carbon credits for a pretty good amount. A small village named Powerguda in Adilabad district, Andhra Pradesh has earned $645 by selling 147 tonnes equivalent of carbon dioxide credits. This was achieved by extracting bio diesel from trees.

Ms. K. Subadrabai, President of the village’s Jangubai Self-Help Group, signed an agreement October 16, 2003 to sell the equivalent of 147 tons of carbon dioxide in emission reduction over 10 years and collected a check for $645 from Mr B. Nagnath, Additional Project Director, of the World Bank-funded DPIP project. Mr. Kevin Cleaver, Sector Manager, Agriculture and Rural Development, had earlier signed the papers in Washington, DC, on behalf of the World Bank. The CO2 emission reduction comes from the substitution of about 51 tonnes of diesel oil by bio fuel produced from Pongamia pinnata, a native tree species found in the local forest. The people of Powerguda had planted 4,500 pongamia trees in 2002 on the edges of their agricultural land. Oil from the pongamia seeds is extracted in the village’s oil mill installed by a local government agency.(source: goodnewindia)

I hope you all are not thinking of switching to CNG from petrol to earn some credit
BTW its not a bad idea to escape rising oil price

Read this funny cartoon strip

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