The Kyoto Protocol provides three mechanisms to help countries meet their GHG (Greenhouse Gas) emissions targets:
- Emissions Trading
- Joint Implementation
- Clean Development Mechanism (CDM)
The protocol provides for developed countries commitment to quantitative emission reduction targets, while developing countries with the opportunity of their participation to mitigate emissions through the CDM. The efforts put in by the projects to reduce GHG emissions have the potential to qualify as CDM project activity and earn CERs (Certified Emission Reductions) or popularly known as Carbon Credits. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.
Carbon Credits Scenario
Carbon Credits allows the entities to reduce the GHG emissions they are responsible for, by offsetting, reducing or displacing the GHG in another place, typically where it is more economical to do so.
India has generated approximately 30 Million carbon credits and approximately 140 million in run, the second highest transacted volumes in the world. India’s carbon market is growing faster than even information technology, bio technology and BPO sectors as 850 projects with a huge investment of Rs 650,000 million are in pipeline. As per the Prime Minister's Council on Climate Change, the revenue from 200 projects is estimated at Rs. 97 billion till 2012.
India has been able to register approximately 350 projects spread across various sectors with major dominance of renewable energy, energy efficiency and biomass energy projects.
Carbon, like any other commodity, has begun to be traded on India's Multi Commodity Exchange and has become first exchange in Asia to trade carbon credits.
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