Carbon dioxides concentration in the Earth's atmosphere has been rising alarmingly. It is produced by combustion of fuels. This is one of the most important greenhouse gas.
Carbon dioxide now has taken a new turn. It is helping people, countries, consultants, traders, corporations to earn billions of rupees. The profits earned by this product was not there some ten years before.
Carbon credits are traded internationally according to their emission norms. Countries emitting less carbon are given incentives. Businesses can exchange, buy or sell carbon credits in international markets at the prevailing market price.
While Europe is going to be the biggest buyers of carbon credits India and China are rising to be the biggest sellers.
Global carbon credit trading last year was around $5 billion, India's contribution was around $1 billion. India emits less carbon as has carbon credits for sale. It can sell to countries which face deficit.
So how much does India has, to sell?
India has some 30 million carbon credits for selling. It is likely to rise it to 140 million through disposal units, plantation companies, chemical plants and municipal corporations and make money.
Carbon, is traded on India's Multi Commodity Exchange since last fortnight. MCX is the first exchange in Asia trading carbon credits.
What actually is carbon credit?
Ten years before carbon emission became a issue and they decided to reduce the emission of harmful gases causing global warming. Every country have been burning fossil fuels and emitting carbon, or other gases resulting in rise of temperature across the globe. These countries then came together and signed an agreement named the Kyoto Protocol.
Under this Kyoto Protocol countries have voluntarily decided to bring down their emission levels to that of 1990th year. Countries have been emitting more carbon and other gases (greenhouse gases include ozone, carbon dioxide, methane, nitrous oxide and even water vapour).
Many companies and factories in developed countries which comprise of mostly European had said that they will bring down the level in the period from 2008 to 2012.
Companies in the developed nations has two ways to reduce emissions. It can either reduce the GHG (greenhouse gases) by adopting new technology or improving upon the existing technology to attain the new norms for emission of gases. The other way is it can tie up with developing countries by helping them to set up new technology that is eco-friendly. The developing country or its companies thus earn credits.
India, China and some other Asian countries are developing countries who profit from this.
For earning credits you have to link yourself to United Nations Framework Convention on Climate Change and know the 'standard' level of carbon emission allowed to their line of activity. For example any company, factories or farm owner in India emitting less carbon as compared to standard fixed by UNFCCC they get credited with carbon credits.
And interestingly these credits are bought over by the companies of developed countries -- mostly Europeans only-- because the United States has not signed the Kyoto Protocol!
Still worse is many companies are not aware and did not apply to get credit even though they had new technologies. There were companies which used their management consultancies and reduced GHG emission. These management consultancies then searched for buyers to sell carbon credits.
But there was no public platform and a price to sell their carbon credits. The price they got was about Euro 15 or maybe less per tonne of carbon. One tonne of carbon credit today fetches around Euro 22. Carbon credit is traded on the European Climate Exchange. If you can emit one tonne less of carbon then you get Euro 22. This is your profit.
Under UNFCCC the polluters cannot buy 100 per cent of the carbon credits they are required to reduce. Out of 100 per cent they have to induce 75 per cent locally by various means in their own country. They can buy only 25 per cent of carbon credits from developing countries.
Having read this mechanisms you too can profit from carbon trading. To know the working of this and profit from carbon trading join Carbon Advice Group.
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