KYOTO PROTOCOL &

CARBON TRADING

PRESENTED BY:
     MUKESH KUMAR MD. ZAHIR KAMAL RAVI KUMAR MANOJ KR. YADAV SATISH KR. SAINI

KYOTO PROTOCOL
The Kyoto Protocol is an international agreement reached in 1997 in Kyoto, Japan to address the problems of climate change. The Kyoto Protocol commits 38 industrialized countries to cut their greenhouse gas emissions. The Canadian government ratified the Kyoto Protocol in December 2002, and has a target of reducing greenhouse gas emissions to six percent below their 1990 levels by 2012. It is a global response to rising greenhouse gas(GHG) emmision that causes climate change. The Protocol binds countries to limit or reduce their emission.

Kyoto Protocol to the United Nations Framework Convention on Climate Change

Signed in 1997; Entry into Force on 16 February 2005 Ratified by >130 countries Major non-participants: USA and Australia Commits industrialised countries to reducing their greenhouse gas emissions by, on average, 5% below 1990 levels in 2008-12 Individual, quantified emission targets for each industrialized country Six greenhouse gases covered: CO2, CH4, N2O, HFC/PFC, SF6 Flexibility mechanisms for financing reductions abroad: Clean Development Mechanism (CDM) Joint Implementation (JI) International Emissions Trading emission

IMPACT OF KYOTO PROTOCOL It is the most far reaching environmental agreement ever adopted. The agreement is a sign that the international community is willing to acknowledge and take action against climate change. Under the protocol, each industrialized country set a binding GHG emission target to reduce emission below 1990 levels by 2012. Concept of CARBON TRADING and CARBON CREDITS come into effect. Limitation is set for every country for emission of GHG.

CARBON TRADING:
A SYSTEM OF CREDITS THAT ALLOWS A COMPANY OR COUNTRY TO REDUCE ITS CARBON-DIOXIDE EMISSION BELOW A TARGET LEVEL TO SELL THE EXTRA REDUCTION AS A CREDIT TO A COMPANY OR COUNTRY THAT HAS NOT MET THE TARGET LEVEL .

CARBON CREDIT: ONE CARBON CREDIT EQUALS TO 1 TON OF EMITTED CARBON DIOXIDE OR OTHER GREENHOUSE GASES.

TARGET BY 2020: 20% cut in greenhouse gas emissions by 2020, compared with 1990 levels 20% increase in use of renewable energy by 2020 20% cut in energy consumption through improved energy efficiency by 2020

How does" carbon trading" work?

Carbon trading is similar in nature to the trading of securities or commodities in stock exchange. Countries having problems on gas emission caps are compelled to purchase additional carbon credit bonds to meet annual quotas. While countries that have not reached their emission caps are free to buy the bonds in anticipation of a windfall in case of a soar in demand. It's like giving a country the right to increase the burn of fossil fuels with the purchase of carbon credits, while another country sells and allows such activity by relinquishing their right to burn Since this would result in gradual cutbacks in emission levels every year, a viable market will most probably develop. Carbon trading means industrialized countries will have to buy emission rights from countries whose level of productivity does not require high levels of carbon dioxide emissions

Environment friendly companies are doubly blessed since they have not fully utilized their emission caps and could therefore sell their carbon credits to raise company profits. This will serve as a boost to the environment since this system will greatly reduce carbon dioxide emissions with some countries reaping pertinent economic benefits.

CARBON TRADING
Company A can reduce 1000 tons CO2E at $2/ton = $2000 Company B can reduce 1000 tons CO2E at $6/ton = $6000

SELL

BUY

1000 tons CO2E at $4/ton = $4000

$2000 Profit Company A - Seller

$2000 Savings Company B - Buyer

Carbon Market
The carbon market is growing rapidly and so are opportunities Together, credits from the clean development mechanism (CDM) and joint implementation (JI) accounted for 226m tonnes worth nearly 2bn in the first half of 2006 Between January and June 2006 around 684m tonnes of carbon worth 12bn were traded, more than five times that for the equivalent period last year The Carbon Emissions Trading Scheme started in January 2005 (10-16 billion euro/market) New Governments in Europe are setting up carbon purchasing funds (Austria, Germany, Belgium, Spain, Italy, Ireland etc) More private sector companies are becoming interested in CERs (EU/UK/Japan/Canada.

GLOBAL CARBON BUYER

Netherlands 4% Europe-Baltic Sea 3%

Netherlands 8%

Europe-Baltic Sea 9%

Austrilia 3% Italy 10%

Japan 7%

Japan 46%

Spain 7%

Spain 6%
UK 15%

Other Unsp. 7%
Other Unsp. 3% Other Europe 12%

UK 50% Other Europe 10%

Overall volume: 352 million tCO2e 2005

Overall volume: 466 million tCO2e 2006

GLOBAL CARBON SELLERS

Brazial 4%

R. of Latin America 6%

India 12% R. of Asia 7%

Aferica 3%

Other & Unsp. 7%

China 61%

ADVANTAGES OF CARBON TRADING:

It greatly helped in reducing the level of Green House Gases from the environment. Considering the increasing concern about global warming and greater carbon emissions into the air, national administrations and other agencies are looking for viable options to reduce pollution. Among many other strategies for dealing with this issue, carbon trading and carbon offset have been highly successful. Businesses buy carbon credits that are available in the market in the carbon trading model. The credits restrict the amount of greenhouse gases that organizations can discharge in to the atmosphere without being penalized for it. The basic advantage of the carbon trading method is that it rewards reduction in emissions. The idea is that businesses will realize that adopting greener processes of doing business is more gainful than paying for carbon credits. If a company is made to pay for polluting the atmosphere then it will try to embrace methods that are less polluting if it wants to stay competitive. As more and more companies adopt this approach, the overall emission levels around the globe will decrease gradually, thus saving the environment.

Another significant benefit of carbon trading is that it works on a free market system, where any company can buy or sell carbon credits. Due to non interference from the local administrations such as imposition of fines or making regional laws, this system is quite successful.

THANK YOU GO GREEN.