CARBON CREDIT

By: DIVINE KAUR

Birth of Carbon Credit

Concept of Carbon Credit

Growth of Carbon Credit & Indias Position

Concern for Chartered Accountants

The Major Concern

GLOBAL WARMING

Green house gases leading to Global Warming

CO2
Methane Nitrous Oxide

Hydroflourocarbon
Sulphur Hexaflouride Perflourocarbon

CO2t-e
one tonne of CO2 equivalent

Birth of UNFCCC
In 1992, Rio Brazil

Objective Green House Gases should be stabilized within a time frame.

The KYOTO PROTOCOL

An agreement signed in December 1997 in Kyoto, Japan

KYOTO PROTOCOL

Annexure 1 Develope d

Non Annexure 1
Developin g Under developed

The Kyoto Protocol

Objective

Reduction of Green House Gases emission by developed countries in the The First Commitment Period

(2008-2012)

DID YOU KNOW????

WHY

Birth of Carbon Credit

Concept of Carbon Credit

Growth of Carbon Credit & Indias Position

Concern for Chartered Accountants

What is Carbon Credit under the KYOTO Protocol

A credit for reducing 1 ton of CO2 (Green House Gases) from the atmosphere

How to generate Carbon Credits???

CARBON CREDITS

CO2

METHA NE EARN CARBON CREDIT METHANE

CO2

USE OF CARBON CREDITS IN EMISSION REDUCTION

REDUCTION

NATIONAL MEASURES

ADDITIONAL MEASURES
THE FLEXIBILITY MECHANISM

FLEXIBILITY MECHANISM Joint implementatio n Project based

Clean development Mechanism

Emission trading

Emission Trading
Payment for CC

Developed country A (needs CC)

Developed country B Earns carbon credits called Assigned Amount Units

Sell these carbon credits

Joint Implementation
Sets a project Developed country A (needs CC)
Sell carbon credits

Developed country B Earns carbon credits called Emission Reduction Units

Clean Development Mechanism (CDM)

Sets a project Developed country (needs CC) Developin g Country Earns carbon credits called Certified Emission Reduction

Sells carbon credits

Concept of VERs
Countries not committed to the protocol

Voluntary Emission Reduction OR Verified Emission reduction

VER

What should be the price of carbon????

At present, price of 1 carbon credit is 10 Euro to 15 Euro

Birth of Carbon Credit

Concept of Carbon Credit

Growth of Carbon Credit & Indias Position

Concern for Chartered Accountants

Market for Carbon Trading

Currently there are 5 Environmental Exchanges, trading in Carbon Credits

EUROPEAN CLIMATE EXCHANGE

POWER NEXT

Indias Stance in Carbon Credits

India along with China, lead countries in earning Carbon Credit

India pocketed Rs 1,500 crores in the year 2005 just by selling carbon credits to developedcountry clients.

India has generated 30 million Carbon credits & 140 million are in pipeline

Some of the Leading companies of India using & selling Carbon Credits

GUJARAT FLOUROCARBONS L

SRF.
The major beneficiary of reducing GHG gases

Birth of Carbon Credit

Concept of Carbon Credit

Growth of Carbon Credit & Indias Position

Concern for Chartered Accountants

Concern for The Chartered Accountants.

ACCOUNTING TREATMENT

Present Accounting treatment..

Treatment under IFRS
IAS 20 (Governmen t grants)

Treatment under US GAAPS

currently no guidance note available

Treatment under AS

currently no accounting standard available

Tax Treatments
Will there be any tax on Carbon Credits ??????
If there is income there will be tax

TAX TREATMENT
DIRECT TAX Income from CERs INDIRECT TAX Goods VAT, etc Business Income Other Income Service s Service tax

OR CER Transaction Tax

However, NO set Accounting or Tax Treatment has yet been decided

Scope for Chartered Accountants

Other opportunities..
As an auditor. In audit of Carbon Trading As a Carbon Trading Consultant Carbon Trading Broker

Birth of Carbon Credit

Concept of Carbon Credit

Growth of Carbon Credit & Indias Position

Concern for Chartered Accountants

What after 2012 End of Commitment Period???

THE COPENHAGEN CONFERENCE

NOT SUCCESSFUL

Thank You