Carbon Credits for Layman

At last Mankind is conscious of doing some right thing for safeguarding human race. from dangerous gases like excess emission of  Carbon-dir-oxide and other gases which makes holes in Ozone layer or making the ozone layer thinner  thus making the world prone to get more warming than the earlier one. So United Nations arranged world countries to sit and discuss and finally arrange to sign Kyoto protocol in 2005.

The Kyoto Protocol is protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aimed at combating global warming. The UNFCCC is an international environmental treaty with the goal of achieving “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

The Protocol was initially adopted on 11 December 1997 in Kyoto, Japan and entered into force on 16 February 2005. As of November 2009, 187 states have signed and ratified the protocol. The most notable non-member of the Protocol is the USA which is a signatory of UNFCCC and was responsible for 36.1% of the 1990 emission levels.

Under the Protocol, 37 industrialized countries  called Annex I countries  commit themselves to a reduction of four greenhouse gases (GHG) (Carbon-dir-oxide, methane, nitrous oxide, sulphur-hexafluoride) and two groups of gases  (hydro fluorocarbons and  per fluoro-carbons ) produced by them, and all member countries give general commitments. Annex I countries agreed to reduce their collective greenhouse gas emissions by 5.2% from the 1990 level. Emission limits do not include emissions by international aviation and shipping, but are in addition to the industrial gases, chlorofluorocarbons, or CFCs, which are dealt with under the 1987  Montreal Protocol on substances that deplete the Ozone layer.

Carbon credits are basic accounting units created by international heads to mitigate the growth in concentrations of Green House Gas simply called GHG. One Carbon Credit is equal to one ton of Carbon Dioxide or in some markets Carbon Dioxide equivalent gases. In order to encourage industrial units to reduce pollution and gas, carbon trading is formulated wherein some monetary benefits can be given to the units which reduces pollution due to gas like CO2 .

There are two ways of earning carbon credits.

  1. Carbon Offset credits:
  2. Carbon reduction credits.

Carbon Offset credits:

This consists of usage of clean forms of energy like wind, solar, hydro and bio-fuels.

Carbon reduction credits:

This consists of collection of carbon and its storage (Carbon storage Capture- CCS) from the atmosphere through some natural/manmade methods like re-forestation, forestation, ocean and soil collection and storing of carbon.

Clean Development mechanism:

The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol  allowing industrialized countries with a greenhouse gas reduction commitment (called Annex –I countries) to invest in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. A crucial feature of an approved CDM carbon project is that it has established that the planned reductions would not occur without the additional incentive provided by emission reductions credits, a concept known as “Additionality”.

The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialized countries. However, in recent years, criticism against the mechanism has increased.

As per Environment and Forests Minister Mr Jairam Ramesh , the Indian Govt has given Host Country Approvals for  more than 1455 projects  as part of the Clean Development Mechanism (CDM) that could attract around $6 billion into the country by 2012 through sale of  Certified Emission Reduction (CER) certificates. The authority for CDM in India is ‘National CDM Authority’ (NCDMA).

Each CER price will be around $10 at the minimum level.

All the above projects are likely to earn developers over 600 million CERs by 2012 and by value it is $6 billion. The minister hopes to reduce India’s annual greenhouse gas emissions by 10%. India will be the second largest country in terms of the number of CDM projects, first being China.

India’s Efforts:

India, on its part, has generated around 30 million carbon credits and approx. 140 million are in pipeline. Around 225 Indian projects in the field of bio-mass, co-generation, hydropower and wind power with a potential of 225 million CERs have been registered with CDM. Carbon offsets from solid waste projects, too, will see a rise. At present, the Indian solid waste management market is witnessing tremendous growth. Currently it is valued at around $156 million and is expected to grow at a rate of around 25% in the next few years.

One initiative for getting carbon credits is the usage of IGCC technology in power plants which can make coal-based power generations 10% more efficient. For every 1% rise in efficiency, then there is 2% decrease in CO2 release.

The planning commission of India has also called for more money for research and development to study the impact of climate change in India. The Integrated energy Policy had recommended Rs.1000 crores investment for R&D on climate change.

The developed countries might be promoting Carbon Storage Capture (CCS) facilities to curb greenhouse gases causing climate change but the Govt has dropped its plans of installing such mechanism in the country’s power plants in view of huge cost.

CCS involves collecting, at its source, carbondioxide (CO2) that is produced by the power plants or industrial facilities and storing it away for a long time in underground layers, in the oceans, or in other materials.

ITC’s Green Effort:

The forestry programme is just one of the eight CDM projects already registered by ITC. ITC Sonar in Kolkata is the first hotel in the world to earn carbon credits. The aim for all the hotels in the group is to achieve carbon positive (four years in a row), water positive (seven years in a row) and solid waste recycling positive (since last year). From its commitment to the triple bottom-line, ITC has chosen wind energy as a focus area for enhancing its positive environmental attempt. The company’s total investment will soon touch Rs,250 crores in wind energy. Currently, 30% of the energy consumed in ITC is from renewable sources . It aims to increase this  to 50% soon.


Initially Kyoto Protocol is signed and it is valid up to 2012 and it is  having the carbon trading component .Now Copenhagen summit may replace it with new treaty in the current year. But terms and conditions in Kyoto protocol should be retained in the new one without much change which will help developing nations to cap emissions at a fraction of the cost. Carbon-efficient projects in India, China and other developing nations are facing the uncertainty over the new compliance rules post 2012 since the Copenhagen Agreement is expected to establish a new sectoral carbon market crediting mechanism with focus on the Clean Development Mechanism in least developed countries(LDC).

Glimmer of Hope for future human race:

“U.N. climate talks open, deal “within reach”

The biggest climate talks in history opened on Monday with a stark U.N. warning of the risk of desertification and rising seas and an assurance by hosts Denmark that a deal to combat climate change was “within reach”(in Copenhagan).

Politicians and scientists urged the Dec. 7-18 talks, attended by 15,000 delegates from about 190 nations, to agree immediate action to curb greenhouse gases and come up with billions of dollars in aid and technology to help the poor.

Danish Prime Minister Lars Lokke Rasmussen said 110 world leaders, including U.S. President Barrack Obama, were signed up to attend a summit at the end of the Dec. 7-18 meeting.

“A deal is within our reach,” Rasmussen said. But the talks will have to overcome deep distrust between rich and poor nations on sharing out the burden of curbing emissions, mainly from burning fossil fuels.

The presence of so many world leaders meant “an opportunity the world cannot afford to miss,” he said of the talks, aimed at agreeing a pact to replace the existing U.N. Kyoto Protocol that runs to 2012.

“The clock has ticked down to zero. After two years of negotiations the time has come to deliver,” said Yvo de Boer, the head of the U.N. Climate Change Secretariat.

Rajendra Pachauri, the head of the U.N. panel of climate scientists, said action was needed to avoid more intense cyclones, heatwaves, floods, and possible loss of the Greenland ice sheet, which could mean a sea level rise of 7 metres over centuries.

He said that even a widely accepted goal of limiting global warming to a maximum of 2 degrees Celsius over pre-industrial times could still bring an increase in sea levels that “could submerge several small island states and Bangladesh.”

“The evidence is now overwhelming that the world would benefit greatly from early action, and that delay would only lead to costs in economic and human terms that would become progressively high,” he said.

The attendance of the leaders and pledges to curb emissions by all the top emitters — led by China, the United States, Russia and India — have raised hopes for an accord after sluggish progress in negotiations over the past two years.

South Africa added new impetus, saying on Sunday it would cut its carbon emissions to 34 percent below expected levels by 2020, if rich countries gave financial and technological help.

World leaders did not attend when environment ministers agreed the Kyoto Protocol in 1997.

British Prime Minister Gordon Brown, writing in the Guardian newspaper on Monday, said: “The British government is absolutely clear about what we must achieve. Our aim is a comprehensive and global agreement that is then converted to an internationally legally binding treaty in no more than six months.”

He added: “If by the end of next week we have not got an ambitious agreement, it will be an indictment of our generation that our children will not forgive.”

Some 56 newspapers from 45 countries including The Guardian, Le Monde, El Pais and Toronto Star on Monday published a joint editorial urging world leaders to take decisive action.

“Humanity faces a profound emergency. Unless we combine to take decisive action, climate change will ravage our planet,” it said.

C R Venkata Ramani



  1. Business-standard newspaper, India dt 07/12/09
  3. Reuters India dt 8.12.09

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