Carbon credits

A
SEMINAR REPORT
ON

Carbon credit
By

Mr. Shewale Ganesh Narayan

In Partial Fulfillment of the requirement for the Bachelor Degree

at T.E. in Mechanical Engineering.

Submitted to

Savitribai Phule Pune University, Pune.

Under the Guidance of

Prof.R.A.Parkhe sir

Department of Mechanical Engineering

Pravara Rural Engineering College, Loni-413736
Tal-Rahata, Dist-Ahmednagar,(M.S),India [2018-19]

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Pravara Rural Education Society’s

Pravara Rural Engineering College, Loni

CERTIFICATE
This is to certify that Mr.Shewale Ganesh Narayan, has successfully
completed the Seminar entitled “Carbon credit ”under my supervision for
the partial fulfillment of Bachelor degree at T.E. in Mechanical Engineering
of Savitribai Phule Pune University, Pune.

Date:

Place: Loni

Prof.R.A.Parkhe sir Prof. R.R.Kharde sir

(Seminar Guide) (Head of Department)

External Examiner

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INDSEX

SR.NO CONTENT PAGE NO

1 Cover page
2 Certificate
3 Acknowledgement
4 Abstract
5 Index 1
6 Introduction 2
7 Clean development mechanism(CDM) 3
8 Emission allowances 4
10 Kyoto protocol 7
11 Financing mpact 7
12 CDM project cycle 8
13 Kyoto ‘Flexible mechanism’ 9
14 Emission market 11
15 Benefits of carbon credits 12
16 How to carbon credits save the planet 13
17 Additionality and its importance 16
17 Conclusion 18
18 Future scope 18
19 References 19

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ACKNOWLEDGEMENT

We place on record and warmly acknowledge the continuous encouragement, invaluable

supervision, timely suggestions and inspire guidance offered by our guide Prof. R.A. Parkhe,
Department of Mechanical Engineering, at pravara rural engineering college pravarnagar, Loin
in bringing this report to a successful completion. We are grateful to Prof.R.R. Kharde, Head of
the Department of Mechanical Engineering For permitting us to make use of facilities Available
in the Department to carry out the seminar successfully. Last but not the list we express our
sincere thanks to all our friends and Our parents who have patiently extended all sorts of help for
Accomplishing this undertaking.

Mr. Shewale Ganesh Narayan

TE (mechanical)

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ABSTRACT
The concept of Carbon Credit Trading is generated from Kyoto Protocol and is basically used to control the
greenhouse gas emissions. This concept is used to earn carbon credit earnings and trading between the
various companies and government. This concept is basically known for the reduction of carbon emissions
in order to mitigate future climate changes; mainly the target is greenhouse gases specially carbon dioxide.

It is important to take stock of global scenario of the carbon credit business.

Global Warming is the current topic in the political agenda across the globe. Every country seems to be
spending lot of time, energy, and money to find solutions to one of the major international problems of
climatic change. Carbon credits are issued to companies that reduce their greenhouse gas credits are then
sold to companies who cannot fulfill the protocol norms, it helps the developing start with clean
technologies; since these machines are expensive therefore funds are provided for countries in the form of
carbon credits. 60- 70% of emission is through fuel combustion in industries such as cement, steel, textile.
Some gases are released as by-products of industrial processes which affect the ozone layer. Carbon Trading
is in its nascent stage in terms of development, which requires time and effort to be groomed as one of the
matured markets. has been given the recognition of an intangible commodity and can be traded on the
commodities market. Trading of car-bon credit happens in the form of Carbon Emission Reduction (CER).
A CER is given by the CDM executive board projects in developing coun-tries to certify that they have
reduced greenhouse gases emissions by one tons of carbon dioxide per year (20).

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INTRODUCTION
The issue of climate change and global warming became the topic of international concern since from 1980s
because of increase in the earth’s temperature.
The effects of this climate change are already being felt around the world.
If this continues over the next century it may cause rises in sea level,
changes in the weather events such as heat waves and diseases particularly in developing countries.
The Kyoto protocol is a first international attempt to address the issue seriously.

Developed countries have to spend nearly $300-500 for every tonne reduction in
carbon. Greenhouse gas emission is much below the target fixed by the Kyoto Protocol therefore reduction
norms of emission. But can sell surplus credits to developed countries manage to million carbon credits.
India's carbon credits' trading was $100 billion at 2010. Carbon credit units are currently trading at $15-
20per unit. Most scientists agree our climate is in a state of flux. In the past century the global temperature
has risen by about 1.26 degrees Fahrenheit (0.7 degree Celsius).

The UN's Intergovernmental Panel on Climate Change has said there's a 90 increase is due to greenhouse
gas emission produced by human activities and the combustion used to produce energy. Emission of
carbon, or gases which result in warming of the globe. So with the reduce the emission of harmful gases
that contributes to the greenhouse effect. So, countries came together and signed an agreement named the
Protocol.
A carbon credit is generic term for any tradable certificate or permit representing the right to emit one tons
of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent to one tons of
carbon dioxide the concept of carbon credits came into existence as a result of increasing awareness and
the need for pollution control.
Carbon credits were one of the outcomes of Kyoto protocol, an international agreement between 169
countries. The Kyoto protocol created legally binding emission targets for developing nations. To meet
these targets, the nation must limit carbon dioxide emission; it was enforced from February 2005 (17).
There are two types of Carbon Credits:
1 Carbon Offset Credits (wind, solar, hydro and biofuels)
2 Carbon Reduction Credits

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1.
Clean Development Mechanism(CDM)
Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing
industrialized countries with a greenhouse gas reduction commitment (called Annex B countries)
to invest in projects that reduce emissions in developing countries as an alternative to more
expensive emission reductions in their own countries. A crucial feature of an approved CDM
carbon project is that it has established that the planned reductions would not occur without the
additional incentive provided by emission reductions credits, a concept known as "additionality".
The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost
by financing emissions reduction projects in developing countries where costs are lower
than in industrialized countries. However, in recent years, criticism against the mechanism has
increased
2. Emission allowance
 The Protocol agreed 'caps' or quotas on the maximum amount of Greenhouse gases for
developed and developing countries, listed in its Annex I. In turn these countries set quotas
on the emissions of installations run by local business and other organizations, generically
termed 'operators'. Countries manage this through their own national 'registries', which are
required to be validated and monitored. Each operator has an allowance of credits, where
each unit gives the owner the right to emit one metric tone of carbon dioxide or other
equivalent greenhouse gas. Operators that have not used up their quotas can sell their
unused allowances 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. As demand for
energy grows over time, the total emissions must still stay within the cap, but it allows
industry some flexibility and predictability in its planning to accommodate this.
 By permitting allowances to be bought and sold, an operator can seek out the most cost-
effective way of reducing its emissions, either by investing in 'cleaner' machinery and

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practices or by purchasing emissions from another operator who already has excess
'capacity'.

 Since 2005, the Kyoto mechanism has been adopted for CO2 trading by all the countries
within the European Union under its European Trading Scheme (EU ETS) with the
European Commission as its validating authority. From 2008, EU participants must link
with the other developed countries that ratified Annex I of the protocol, and trade the six
most significant anthropogenic greenhouse gases. In the United States, which has not
ratified Kyoto, and Australia, whose ratification came into force in March 2008, similar
schemes are being considered.

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4. Kyoto protocol
 The Kyoto Protocol to the United Nations Framework Convention on Climate
Change (UNFCCC) was adopted by more than 150 countries at the third session of
the Conference of the Parties to the UNFCCC in Kyoto, Japan, on 11 December
1997. It is an international treaty containing binding constraints on greenhouse gas
emissions and, mechanisms aimed at cutting the cost of reducing emissions and
establish global markets for greenhouse gas (GHG) emission permits. Under the
Kyoto Protocol, industrialized countries and countries with economies in transition
will reduce their combined GHG emissions by at least five per cent below their
1990 levels by the first commitment 2008 to 2012. The most important GHG is
carbon dioxide (CO2) whose emissions are mainly related to combustion of fossil
fuels.
 The developed countries commit themselves to reducing their collective emissions
of six key greenhouse gases by at least 5%. This group target will be achieved
through cuts of 8% by Switzerland, most Central and East European states, and the
European Union (the EU will meet its target by distributing different rates among
its member states); 7% by the US; and 6% by Canada, Hungary, Japan, and Poland.
Russia, New Zealand, and Ukraine are to stabilize their emissions, while Norway
may increase emissions by up to 1%, Australia by up to 8%, and Iceland 10%. The
six gases are to be combined in a "basket", with reductions in individual gases
translated into "CO2 equivalents" that are then added up to produce a single figure.
 Each country’s emissions target must be achieved by the period 2008-2012. It will
be calculated as an average over the five years. "Demonstrable progress" towards
meeting the target must be made by 2005. Cuts in the three most important gases –
carbon dioxide (CO2), methane (CH4), and nitrous oxide (N20) - will be measured
against a base year of 1990 (with exceptions for some countries with economies in
transition).
Cuts in three long-lived industrial gases – hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulphur hexafluoride (SF6) - can be measured
against either a 1990 or 1995 baseline. (A major group of industrial gases,
chlorofluorocarbons, or CFCs, are dealt with under the 1987 Montreal Protocol on
Substances that Deplete the Ozone Layer.)
 Actual emission reductions will be much larger than 5%. Compared with emissions
levels projected for the year 2000, the richest industrialized countries (OECD
members) will need to reduce their collective output by about 10%. This is because
many of these countries will not succeed in meeting their earlier non-binding aim
of returning emissions to 1990 levels by the year 2000; their emissions have in fact
risen since 1990. While the countries with economies in transition have
experienced falling emissions since 1990, this trend is now reversing.
 Therefore, for the developed countries as a whole, the 5% Protocol target
represents an actual cut of around 20% when compared with the emissions levels
that are projected for 2010 if no emissions-control measures are adopted.
 Countries have a certain degree of flexibility in how they make and measure their
emissions reductions. In particular, an international "emissions trading" regime is
established allowing industrialized countries to buy and sell emissions credits
amongst themselves. They will also be able to acquire "emission reduction units"
by financing certain kinds of projects in other developed countries through a
mechanism known as Joint Implementation. In addition, a "Clean Development
Mechanism" for promoting sustainable development enables industrialized
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countries to finance emissions-reduction projects in developing countries and

receive credit for doing so.
 The Protocol shall enter into force on the ninetieth day after the date on which not
less than 55 Parties to the Convention, incorporating Annex I Parties which
accounted in total for at least 55 % of the total carbon dioxide emissions for 1990
from that group, have deposited their instruments of ratification, acceptance,
approval or accession.
5. .The Kyoto mechanisms encompass the following three instruments:
1. Joint Implementation (JI, Article 6 Kyoto Protocol) projects in other Annex B countries that
lead to Emission Reduction Units (ERUs),
2. Projects in countries without emission targets Clean Development Mechanism (CDM), Article 12
Kyoto Protocol) that lead to Certified Emission reductions (CERs), and
3. International Emission Trading (IET, Article 17 Kyoto Protocol) of Assigned Amount Units
(AAUs) among Annex B countries.
The concepts of JI and CDM refer to project based co-operations between two countries, where GHG
emission reductions take place in the country with lower marginal abatement costs. In other words,
a country that has adopted a quantified GHG emission reduction or limitation commitment under the
Kyoto Protocol can fulfils parts of this commitment on the territory of another country where the
costs are lower. The CDM envisages a project co-operation between industrialized countries with
commitments (Annex I countries) and developing countries (non-Annex I countries), which have
exempted from quantified commitments under the Protocol (JI refers to a project-based co-operation
between two industrialized countries).
The main benefits that can be expected from the project-based Kyoto mechanisms are, on the one
hand, that they potentially reduce industrialized countries’ costs of meeting the Kyoto Protocol
targets, whereas, on the other hand, they are to support the host countries objectives regarding
sustainable development.
With the help of CDM, countries which have set themselves an emission reduction target under the
Kyoto Protocol (Annex I countries) can contribute to the financing of projects in developing countries
(non-Annex I countries) which do not have a reduction target. Contributing to the sustainable
development of the host country, the project should reduce the emission of greenhouse gases. The
achieved emission reductions can be used by the Annex I country in order to meet its reduction target.

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6. Financial impact
 Revenue side
 The return of CDM investments depends on how emission permits are used by the
investor.
 There are two basic options for the investor:
 1. Sell the emission permits to other companies or governments on international markets
 2. Use the emission credits for offsetting emissions of own operations outside the CDM
host country that are regulated by climate policies.
 A third option might be banking or saving of emission permits for future use.
 Depending on the specific circumstances, renewable energy projects may generate
emission permits, thus increasing the expected return. Market prices for emission permits
are estimated to be between 5 to 20 EUR per ton CO2 [Janssen (2001)]. Overall financial
risk of renewable energy projects may be reduced by engaging in emissions trading and
the Kyoto Mechanisms.
7. Cost side
Along the CDM project cycle may arise a variety of different transaction costs. This includes the
following:
Project identification and selection: Search costs incurred by project developers and potential
investors in identifying prospective projects. The costs for developing project selection criteria,
costs of ranking projects according to the preferences of investors are also encompassed
Project development and baseline determination: Information costs related to the preparation of a
project concept note providing relevant information on project baseline, expected additional
emission reductions and corresponding costs.
Project validation: Validation is the process of independent evaluation of a project activity on the
basis of the project design document.
Project approval: Projects need to be approved by the host government.
Project registration: Registration is the formal acceptance by the relevant international bodies of a
validated project as CDM project activity.
Project implementation: Monitoring and enforcement costs of contracts during construction, start-
up and operation phase.
Project monitoring and reporting: Monitoring refers to the measurement of data for the
determination of actual GHG emissions. Reporting relates to reporting the measured relevant data
and the subsequently calculated actual GHG emissions of a project.
Project certification: Certification is the written assurance by a designated operational entity that,
during a specific time period, a project activity achieved the emission reductions as verified.
Transfer and use of emission permits: Transactions costs at that stage include reporting of transfers
of emission permits to dedicated registries.

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8. Significance of Kyoto protocol

In response to the global warming crisis, in Rio deo Janeiro of Brazil, the 1992 UN
Conference on the Environmental and Development clearly raised the concept of
“sustainable development”. Through this conference more than 150 countries had
established “United Nations Framework Convention on Climate Change”, which was
called UNFCCC for short. UNFCCC is the first convention to take full control of
greenhouse gas emissions including Carbon dioxide discharge, and is an international
convention to fight global warming which causing a lot of and adverse effect to the
development of society and economy.
After that, in December 1997, the third Conference of the Parties (COP) under the
UNFCCC held in Kyoto of Japan, which aimed at limiting carbon emissions in
developed countries. In this way, we can curb global warming .The conference ended
with an agreement of “Kyoto Protocol”. The Kyoto Protocol 1997 is an emissions
target agreement established 11 December Kyoto, Japan and entered intoforce on 16
February' 2005. As of November 2009.If" signed the protocol. Though US is not a
member which responsible for 36.1% of lay emission levels. The international
agreement asked 37 countries to reduce their greenhouse gas by 2012. This will help
in clean development mechanisms. Carbon credits are turning carbon emissions into a
tradable commodity. Each country is given an annual emissions quota. The goal of the
program is to reduce emissions by 5.2 percent of the 1990 levels by 2012.
The objective is the "stabilization
and reconstruction of greenhouse gas concentrations in the atmosphere at a level that
would prevent dangerous anthropogenic interference with the climate system. Under
Kyoto Protocol the countries that have been emitting more carbon and other gases
(greenhouse gases include ozone, carbon dioxide, methane, nitrous oxide and even
water vapors) have voluntarily decided that they will bring down the level of carbon
they are mining to the levels of early 1990. Developed countries, mostly European, had
said that they will bring down the level in the period from 2008 to 2012. In 2008, these
developed countries have decided on different norms to bring down the level of
emission fixed for their companies and factories.
A company has two ways to reduce
emissions. One, it can reduce the GHG (greenhouse: ases) by adopting new technology
or improving upon the existing technology to attain the new norms for emission of
gases. Or it can tie up with developing nations and help them set up new technology
that is eco-friendly, thereby helping developing country or its companies "earn credits.

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9. CDM project cycle

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11.Kyoto ‘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, or it can be an offset of emissions. Such offsetting and
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. 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 that enable countries or operators in developed
countries to acquire greenhouse gas reduction credits.
1. Under Joint Implementation (JI) a developed country with relatively high costs of domestic
greenhouse reduction would set up a project in another developed country.
2. Under the Clean Development Mechanism (CDM) a developed country can 'sponsor' a
greenhouse gas reduction project in a developing country where the cost of greenhouse gas
reduction project activities is usually much lower, but the atmospheric effect is globally
equivalent. The developed country would be given credits for meeting its emission reduction
targets, while the developing country would receive the capital investment and clean technology
or beneficial change in land use.
3. Under International Emissions Trading (IET) countries can trade in the international carbon
credit market to cover their shortfall in allowances. Countries with surplus credits can sell them
to countries with capped emission commitments under the Kyoto Protocol.
These carbon projects can be created by a national government or by an operator within the
country. In reality, most of the transactions are not performed by national governments directly,
but by operators who have been set quotas by their country.

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12.Emission markets
For trading purposes, one allowance or CER is considered equivalent to one metric tonne
of CO2 emissions. These allowances can be sold privately or in the international market at
the prevailing market price. These trade and settle internationally and hence allow
allowances to be transferred between countries. Each international transfer is validated by
the UNFCCC. The European Commission additionally validates each transfer of
ownership within the European Union.
Climate exchanges have been established to provide a spot market in allowances, as well
as futures and options market to help discover a market price and maintain liquidity.
Carbon prices are normally quoted in Euros per tonne of carbon dioxide or its equivalent
(CO2 e). Other greenhouse gasses can also be traded, but are quoted as standard multiples
of carbon dioxide with respect to their global warming potential. These features reduce the
quota's financial impact on business, while ensuring that the quotas are met at a national
and international level.
Currently there are five exchanges trading in carbon allowances: the Chicago Climate
Exchange, European Climate Exchange, Nord Pool, PowerNext and the European Energy
Exchange. Recently, NordPool listed a contract to trade offsets generated by a CDM
carbon project called Certified Emission Reductions (CERs). Many companies now
engage in emissions abatement, offsetting, and sequestration programs to generate credits
that can be sold on one of the exchanges. At least two private electronic markets have been
established in 2008:
The first commitment period of the Kyoto Protocol excluded forest conservation/avoided
deforestation from the CDM for a variety of political, practical and ethical reasons.
However, carbon emissions from deforestation represent 18-25% of all emissions, and will
account for more carbon emissions in the next five years than all emissions from all aircraft
since the Wright Brothers until at least 2025. Forests First in the Fight against Climate
Change] Global Canopy Programme, 2007. This means that there have been growing calls
for the inclusion of forests in CDM schemes for the second commitment period from a
variety of sectors, under the leadership of the Coalition for Rainforest Nations, and brought
together under the Forests Now Declaration, which has been signed by over 300 NGOs,
business leaders, and policy makers.
There is so far no international agreement about whether projects avoiding deforestation
or conserving forests should be initiated through separate policies and measures or
stimulated through the carbon market. One major concern is the enormous monitoring
effort needed in order to make sure projects are indeed leading to increased carbon storage.
There is also local opposition. For example, May 2nd 2008, at the United Nations
Permanent Forum on Indigenous Issues (UNPFII), Indigenous leaders from around the
world protested against the Clean Energy Mechanisms, especially against Reduced
Emissions from deforestation and degradation.

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13.Benifits of carbon credits

(1) Provide an additional source of revenue.
(2) Improve the return on investments in Projects.
(3) Boost the economic feasibility of projects.
(4) Accelerate project implementation.
(5) Contribution towards the fight against Global warming.

14.How carbon credit save the planet

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15.Additionality and its importance

It is also important for any carbon credit (offset) to prove a concept called additionality. Additionality
is a term used by Kyoto's Clean Development Mechanism to describe the fact that a carbon dioxide
reduction project (carbon project) would not have occurred had it not been for concern for the
mitigation of climate change. More succinctly, a project that has proven additionality is a beyond-
business-as-usual project.
It is generally agreed that voluntary carbon offset projects must also prove additionality in order to
ensure the legitimacy of the environmental stewardship claims resulting from the retirement of the
carbon credit (offset).

According the World Resources Institute/World Business Council for Sustainable Development
(WRI/WBCSD): "GHG emission trading programs operate by capping the emissions of a fixed number
of individual facilities or sources. Under these programs, tradable 'offset credits' are issued for project-
based GHG reductions that occur at sources not covered by the program. Each offset credit allows
facilities whose emissions are capped to emit more, in direct proportion to the GHG reductions
represented by the credit.

The idea is to achieve a zero net increase in GHG emissions, because each tonne of increased emissions
is 'offset' by project-based GHG reductions. The difficulty is that many projects that reduce GHG
emissions (relative to historical levels) would happen regardless of the existence of a GHG program
and without any concern for climate change mitigation.

If a project 'would have happened anyway,' then issuing offset credits for its GHG reductions will
actually allow a positive net increase in GHG emissions, undermining the emissions target of the GHG
program. Additionality is thus critical to the success and integrity of GHG programs that recognize
project-based GHG reductions."

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16.Involvement of india
India comes under the third category of signatories to UNFCCC. India signed and ratified the Protocol in
August, 2002 and has emerged as a world leader in reduction of greenhouse gases by adopting Clean
Development Mechanisms (CDMs) in the past few years. According to Report on National Action Plan for
operational sing Clean Development Mechanism(CDM) by Planning Commission, Govt. of India, the total
CO2-equivalent emissions in 1990 were 10, 01, 352 Gg (Gigagrams), which was approximately 3% of
global emissions. If India can capture a 10% share of the global CDM market, annual CER revenues to the
country could range from US$ 10 million to 300 million (assuming that CDM is used to meet 10-50% of the
global demand for GHG emission reduction of roughly 1 billion tonnes CO2, and prices range from US$
3.5-5.5 per tonne of CO2). As the deadline for meeting the Kyoto Protocol targets draws nearer, prices can
be expected to rise, as countries/companies save carbon credits to meet strict targets in the future.
India is well ahead in establishing a full-fledged system in operational sing CDM, through the Designated
National Authority (DNA). India has generated some 30 million carbon credits. India has surplus credit to
offer to countries that have a deficit.

For example a small a forestation project in Haryana has become the first in the world to qualify for carbon
credits, which the project managers can sell in a developed country. The European Commission (EC), which
has co-funded the Haryana Community Forest. Project of which this project to get carbon credits is a small
part - said in a statement here Thursday that thiswas the first small-scale a forestation project in the world to
get certified by the Clean Development Mechanism (CDM) of the UN, The governing board of the CDM
decides if a project qualifies to get carbon credits, and the number of credits it gets. Known officially as
Certified Emission Reduction (CER) credits, each CER is equivalent to one tonne of carbon dioxide. CERs
are bought and sold in specialized international exchanges. Developed countries use them towards meeting
their mandatory greenhouse gas reduction targets under the Kyoto Protocol.

In this project, 370 hectares of sandy land belonging to 227 farmers in eight villages of Sirsa district in
Haryana have been selected to get the carbon credits, the EC statement said. The proposed CDM project was
approved by the COM Executive Board of the UN Framework Convention on Climate Change March 23.

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17.CONCLUSION

Carbon credits have become entrenched in the broader climate change debate; however, fundamental
scientific and methodological problems persist. While these remain unresolved, they have the potential
to seriously undermine the financial and environmental value of any carbon credits scheme. The danger
is that reducing emissions at source and re-capturing carbon through sequestration are being treated by
government and industry as equivalent policy options. ET should not be a mechanism that facilitates
the transfer of fossilized carbon locked away for millions of years over to short-term biotic sinks. For
this reason, the issue of carbon sinks is currently undermining the integrity of carbon credits and the
creation of a carbon trading market.
Carbon credits are now a key component of national and international emissions trading schemes. 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. Credits can
be exchanged between businesses or bought and sold in international markets at the prevailing market
price. Credits can be used to finance carbon reduction schemes between trading partners and around
the world.
There are also many companies that sell carbon credits to commercial and individual customers who
are interested in lowering their carbon footprint on a voluntary basis. These carbon off-setters purchase
the credits from an investment fund or a carbon development company that has aggregated the credits
from individual projects. The quality of the credits is based in part on the validation process and
sophistication of the fund or development company that acted as the sponsor to the carbon project.
Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the
cost of polluting the air. Emissions become an internal cost of doing business and are visible on the
balance sheet alongside raw materials and other liabilities or assets. The ultimate objective of
regulating pollution through MBIs is improved environmental quality.

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REFERENCES
1. Climate change and KYOTO Protocol’s, clean development mechanism by M. Orford, S.Raubenheimer, Barry Kantor.
2. Green wealth by Kevin Francis Noon.
3. Emissions trading principles and practice by Thomas H Tietenberg.
4. From Wikipedia, the free encyclopedia.
5. http//www.preserval.com
6.http://en.wikipedia.org/wiki/Clean_Development_Mechanism
7. http://iis-db.stanford.edu/pubs/21211/Wara_CDM.pdf
9. http://indscanblog.com/
10. http://indscanblog.com/2010/05/03/carbon-bazaar-2010-an-event-for-carbontrading/
11. http ;//www.carbontrading, com/
12. httpy/www.wisegeek.com/ w%t4s-carbon-coredit-lrading,htm
13. http://www.carbontradewatch;org/

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