Saturday, November 20, 2010

Carbon Trading


After the Kyoto Summit, all the developed countries agreed to limit their emission level and if not they have to pay a price for their emission. Here the carbon trading comes to ply. The main idea behind carbon trading is to curtail the emission levels of each country and give monetary benefits to the countries with low emissions. As the developing countries can start with clean technologies they will get more monetary benefits from the developed countries.

          For example if a company in India cuts X tones of carbon, it can sell this much amount of points to a company which is emitting carbons in the developed country. The World Bank itself is the monitoring authority.

                Hence carbon trading allows carbon emitting industries in the developed countries to set of their emissions by investing in a large scale mass reforestation projects in the developing countries to nullify their emission. 100000 hectares of forest can eliminate one million tons of carbon in a year from the environment.

                The calculation is very simple. Half of the trees dry weight is carbon. The amount of carbon stored by the trees is calculated from their volume (the volume is calculated the height and the area of cultivation of forest).From the volume the dry wood is calculated and from this carbon proportion is estimated. These projects not only directly fetch money but also indirectly give social, economic and environmental benefits to the developing country.
                India is the second largest country after china. India has generated 30 million carbon credits and expecting 140 million credits in the long run. Around thousand carbon credit projects have already started and around two hundred new projects every year added every year.
                Presently, carbon credit from thermal projects gives 7 to 8$ in the international market. Now NCDEX  is to commenced carbon trading in Indian market. Carbon trading is one of the fast growing volatile market.