What picture does the title of this post brings to your mind? Six months back if I had heard this term I would have imagined six to seven sacks of coal being packed in a tricycle by two to three workers with beedis in their mouth and being sent away. But surprisingly its not carbon trading.It involves UNO, and the intellectuals from all over the globe.
Concept and Implementation:
The concept behind it is like this. Say you have a younger brother. Your dear dad gives each of you a crayon set and tells you should not bother him for more crayons. You draw a lot and it seems you will finish all the crayons very soon. This leaves you with two options. One option is you can reduce the crayon usage. The other option is you can teach your younger brother pencil art where he need not use crayon much and you can get the crayon later from him by giving him something.If you are going to get one crayon from him you should give him two chocolates.
Now you or the elder one is the developed country. The cute younger brother is the developing country. The crayons are nothing but carbon.The dad who sets limit on crayon usage is United Nations Framework Convention on Climate Change.This plan is formulated in Kyoto Protocol,one of the many conferences arranged by UN on global issues. Let me explain. Say a company is operating in Europe. It is currently producing X amount of carbon which exceeds the norm by Y. It must reduce the emission. It can either adopt green technologies in Europe or help its subsidary in India to adopt green technologies(teaching pencil art) so that the emissions in India will be lesser than those set by the UNFCC(lesser than one crayon set promised by Daddy). Say by the use of technologies the emission in developing country is Y less than the norm set by UNFCC. Then the Y is credited in the developing country account. Now the Plant in developed country can buy Y from the developing nation and use it.
In India carbon is included as a commodity in Multi Commodity Exchange (MCX).MCX is the exchange in Asia to trade carbon credits. Any company in India or any developing nation in Kyoto Protocol can contact United Nations Framework Convention on Climate Change and know the ’standard’ level of carbon emission allowed for its outfit or activity. The extent to which It is emitting less carbon (as per standard fixed by UNFCCC) it will be credited.
Role Of few Developed nations:
You will be astonished to know that America refused to sign Kyota Protocol. Like a whining child it pointed his fingers towards China and told, “I wont accept these carbon emission limits until China and India accepts.It is the largest producer of Carbon”. Let me confess. I have never seen such an illogical argument from a responsible country. US contributes 5% of world’s population. China constitutes 20% of the world’s population. Now Hold your breath. China constitutes 24% of world’s carbon emission and USA constitutes 22%!So,In carbon di oxide emissions per capita list China stands in 91st rank whereas USA is in 10th position.Similarly Australia has also refused to sign Kyoto protocol.
Impact of Recession on Carbon Trading:
As per Kyoto Protocol developed countries should meet the norms set by UNFCC by 2012. When carbon trading is implemented(By 2008),the economy was in boom and the production was high. So there was a great demand for these carbon credits . What the great men had in their mind while planning this wonderful scheme is that due to the increasing demand the price of carbon credits will be very high.So they expected that the companies instead of spending huge money on buying carbon credits will invest in green technologies and greatly reduce the usage of fossil fuels or anything that will create green house gases by 2012. They were true as the rates went as high as 36 euros for 1 tonne of carbon emission.But due to the meltdown the production has gone done. Obviously there is no great demand for carbon. Now the rate is in single digit like 7 euros for one ton of carbon emission. So instead of concentrating on green technologies developed nations are buying a lot of these carbon credits at throw away prices and using them. Unfortunately the dream of creating a better world by 2012 still remains a dream.
