Global carbon trading
has gained momentum. The Worldwatch Institute, drawing from various
studies, places the total value of the trade in 2007 at $59.2 billion,
an 80 per cent increase over 2006. As the 2012 deadline for reducing
emission levels approaches, the volume of carbon trading will be
enormous. Asian countries are the biggest sellers and western countries
the biggest buyers. A World Bank report on the 2007 carbon market shows
that China has a market share of 61 pe r cent and India 12 per cent.
The Government of India, as a part of its commitment to the Kyoto
Protocol, set up in 2003 a National Clean Development Mechanism
Authority, which has been reviewing proposals for carbon credits.
However, the final credits are issued by the Executive Board of the
Clean Development Mechanism at the United Nations Framework Convention
of Climate Change (UNFCCC). India has garnered 35 million of the 102
million Certified Emission Reductions (CERs) issued up to January 2008.
This augurs well for the country and its entrepreneurs. Nevertheless, a
few issues surface time and again to remind us how the system can be
improved. The pricing of CERs has become a major issue. Studies by
groups such as the Centre for Science and Environment, New Delhi and by
the New Zealand government on CER pricing have highlighted the lack of
transparency. This hinders the just distribution of benefits and paves
the way for manipulation. The data available indicate that the price of
CERs ranges from $11 to $22 and naturally such wide variation raises
troubling questions. Arguments for lower prices emphasise scale, risk,
and delay in delivery of CERs as determining factors. However, the
sellers who bear the burden of investment and delivery should be able
to reap the benefits of better prices where they exist. Information on
prevailing prices should be easily and freely available. This becomes
important in the context of calls for including community projects in
the carbon trade. Whether transparency can be imposed through a
regulatory authority or by an alternative method needs to be discussed
and quickly settled. Reducing emissions at source is the best option
but until that is achieved a regulated carbon market is a necessity.
For India, there is yet another issue. To their credit, private
entrepreneurs predominate in the list of projects approved by UNFCCC.
Government projects and the public sector, which have not shown any
serious interest in accumulating CERs, need to be prodded to follow
their example.
http://www.thehindu.com/2008/02/13/stories/2008021354541000.htm
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