D EMYSTIFYING C ARBON C REDITS

C ARBON C REDIT C ERTIFICATE

NEED FOR IT…  Helps Capping total annual emissions  Assigns a monetary value to the carbon emitted  Gives business and economic incentives to Organization who reduce emission.  Necessitates adoption of clean technologies by the developed nations.  Helps developing nations get foreign investment for developing advanced clean technologies. C ARBON C REDITS

1992 UNFCCC establishes Framework 1997 Treaty negotiated in Kyoto (Japan) Opened for signature 2005 Agreement Came into Existence K YOTO : B ACKGROUND

 183 Countries ratified as of Jan 2009  This represents about 64% of industrialized country emissions  Developed countries have a target to reduce GHG emissions by 5.2%  India, China, and Brazil are classified as emerging countries and hence exempted from this protocol K YOTO P ROTOCOL

UNFCC Kyoto Protocol Project Based Clean Development Mechanism Joint Implementation Allowance Based International Emission Trading KP M ECHANISMS

Clean Development Mechanism  Sales of CER from Developing to Developed country  Certified Emission Reductions (CER)  1430 Registered projects reducing 550 Mton CO 2 Source : UNFCCC Site

J OINT I MPLEMENTATION  One industrialised country to another  Emission Reduction Units (ERU)  203 Projects reducing 21 Mton CO 2 Source : UNFCCC Site

 Cap and Trade  Assigned Amount Units (AAU)  EU ETS, UK ETS, CCX International Emissions Trading Businesses that don’t reduce emissions enough must buy credits Businesses that reduce emissions more than required can sell credits MONEY CREDITS GHG emission cap (set by authorities) Cap is lowered over time The European Union Emission Trading Scheme is the largest under Kyoto

P ROJECT B ASED T RANSACTIONS Source : UNFCCC Site

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