Is ‘Carbon Trading’ a holistic GREEN initiative?
The latest commoditization in the market is in the greenhouse gas (GHG) emission. Thanks to Kyoto Protocol which commits industrialized nations to target GHG emission.
Carbon Trading expected to open up a massive USD 2 trillion market by 2010, the question remains unanswered is its ability to contain GHG to save the planet.
While some of the dirtiest polluting industries which uses coal-fired power plants gets benefited by remaining in the business by still polluting the planet, does the ‘flexibility’ offered by Kyoto Protocol by means of Carbon Trading helps the environment in reducing the GHG emission in two different forms of trading namely – ‘cap and trade’ and ‘carbon offsetting’?
Under the cap and trade schemes, government and international bodies sets a limit of allowable emission to industries and allows them to buy carbon credit (one carbon credit is equal to one ton of carbon dioxide equivalent reduction a year) from other industries who has surplus credits with them or from the open market to meet their target.
Carbon offsetting scheme allows industries to finance ‘emission-saving projects’ outside the capped area to generate carbon credits which can also be traded within the carbon market. The UN’s Clean Development Mechanism (CDM) is the largest such scheme with almost 1,800 registered projects in developing countries by September 2009, and over 2,600 further projects awaiting approval.
Number of specialist market players in the carbon trading including exchanges, financial institutions, brokers, custodians has emerged to tap this virgin market. But the question remains unanswered whether this scheme is really going to help in reducing the GHG emission or is it only going to shift the location of emission from the industrialized countries to the developing countries? Is there any net reduction of carbon emission? Are the limits set by countries justifiable? At this point of time, there is more number of questions than answers!
Tags: carbon trading, Global Warming, Green IT
Uncategorized | Aslam | 
October 13, 2009 3:39 pm
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