2. INTRODUCTION
Greenhouse Gases: Carbon dioxide (CO2)
The main source of CO2 emissions is the
burning of fossil fuels:
heating
power generation
transportation
Deforestation
CO2 has the largest impact on the greenhouse effect.
There are Six Green House Gases:
(Carbon Dioxide, Methane, Nitrous Oxide, Hydro-Fluoro-
Carbons, Per-Fluoro-Carbons and Sulphur-Hexa-Floride) .
The gases increase the atmosphere's ability to trap infrared
energy and thus affect the climate

3. What is Carbon credit ?
Carbon credits are a key component of national
and international emissions trading that have been
implemented schemes to mitigate global warming
The concept of carbon credits came into existence
as a result of increasing awareness of the need for
controlling emissions.
They provide a way to reduce greenhouse effect
emissions on an industrial scale by capping total
annual emissions and letting the market assign a
monetary value to any shortfall through trading .

4. The greenhouse mitigation project generate
credits and these credits can be exchanged
between businesses or bought and sold in
international markets at the prevailing market
price .
The protocol followed with respect to carbon
trading was KYOTO PROTOCOL.

5. Kyoto protocol
Protocol to the international Framework Convention
on Climate Change with the objective of reducing
Greenhouse gases that cause climate change.
It was agreed on 11 December 1997 at the 3rd
Conference of the Parties to the treaty when they
met in Kyoto in Japan.
Came into force on February 16, 2005

6. OBJECTIVE
Kyoto is intended to cut global emissions of
greenhouse gases.
The objective is to achieve "stabilization of
greenhouse gas concentrations in the atmosphere at
a level that would prevent dangerous anthropogenic
interference with the climate system."

7. Emission Allowances:
The Protocol agreed 'caps' or quotas on the
maximum amount of Greenhouse gases for
developed and developing countries, listed in its
Annex I .
Operators- local business and other organizations.
Each operator has an allowance of credits, where
each unit gives the owner the right to emit one metric
tonne of carbon dioxide or other equivalent
greenhouse gas

8. Unused allowances are sold as carbon credits.
while businesses that are about to exceed their
quotas can buy the extra allowances as
credits, privately or on the open market
National 'registries‘ managed – to validate and
monitor for compliance by the UNFCCC.

9. Kyoto's 'Flexible mechanisms'
A credit can be an emissions allowance which was
originally allocated or auctioned by the national
administrators of a cap-and-trade program
mitigating activities can occur in any developing
country which has ratified the Kyoto Protocol, and
has a national agreement in place to validate its
carbon project through one of the UNFCCC's
approved mechanisms.

10. Once approved, these units are termed Certified
Emission Reductions, or CERs. The Protocol allows
these projects to be constructed and credited in
advance of the Kyoto trading period.
The Kyoto Protocol provides for three mechanisms
- Joint Implementation
- Clean Development Mechanism
- Emissions Trading

11. Emissions Market
These allowances either can be sold privately or in
the international market at the prevailing market
price.
UNFCCC – It validates each international transfer.
Carbon prices are normally quoted in Euros per
tonne of carbon dioxide .
The Chicago Climate Exchange, European
Climate Exchange, Nord Pool, and PowerNext.
Currently are four exchanges.

12. How buying Carbon credit can
reduce emissions?
It creates a market-by giving a monetary
value to the cost of polluting air.
Emissions become an internal cost of doing
business
Example

13. Setting a market price for carbon
 Unchecked energy use and emission levels
are predicted to keep rising
 Rule of supply and demand will push up the
market price
• Encourage more groups to undertake
environmentally friendly activites

14. India’s Role
India signed and ratified the Protocol in
August, 2002.
India has generated 30 million carbon
credits, the second highest transaction
volumes in the world.

15. Criticism
The Kyoto trading period only applies for five
years between 2008 and 2012.
As several countries responsible for a large
proportion of global emissions (notably
USA, Australia, China and India) have avoided
mandatory caps.
 Concerns raised over the validation of CDM
credits.