Carbon Trading in India: Growth and Future
A Long-Run Sustainable Development Model to motivate industries to lower emissions.
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Introduction: The 1992 Kyoto Protocol
The 1992 Kyoto Protocol is an international treaty signed by Parties to the United Nations Framework Convention on Climate Change (UNFCCC). The purpose of the Kyoto Protocol is to reduce the greenhouse gas emissions that contribute to global warming. The Protocol was adopted in Kyoto, Japan in 1997 and entered into force in 2005.
To achieve its objective, the Kyoto Protocol introduced three mechanisms, known as the "flexible mechanisms," which allow Parties to the Protocol to achieve emissions reductions in a cost-effective manner. These mechanisms are:
Emissions trading: This mechanism allows Parties with emissions reduction targets to buy and sell emissions allowances among themselves. The idea is that if one Party has difficulty reducing its emissions, it can purchase emissions reductions credits from another Party that has reduced its emissions beyond its target.
The Clean Development Mechanism (CDM): This mechanism provides a way for developed countries to invest in emissions reduction projects in developing countries and earn credits towards meeting their emissions reduction targets. The CDM helps to transfer technology and financing to developing countries, and supports sustainable development.
Joint Implementation (JI): This mechanism allows Parties to collaborate on emissions reduction projects in another Party's territory, and earn credits towards meeting their emissions reduction targets. JI provides a way for Parties to work together to achieve emissions reductions in a cost-effective manner, and encourages cooperation and technology transfer between Parties.
India as a Main Beneficiary from The Clean Development Mechanism
India is one of the largest beneficiaries of the Clean Development Mechanism (CDM) established under the Kyoto Protocol, an international treaty aimed at reducing greenhouse gas emissions. The CDM provides a way for developed countries to invest in emissions reduction projects in developing countries, and earn credits towards meeting their emissions reduction targets.
Since its inception, the CDM has played a crucial role in promoting sustainable development in India, particularly in the areas of renewable energy and energy efficiency. The mechanism has helped to transfer technology and financing to India, and has supported the development of a range of clean energy projects, including wind, solar, and biomass power plants.
As of 2021, India has registered over 1,000 CDM projects, more than any other developing country. These projects have generated over 1 billion Certified Emission Reductions (CERs), which are tradable credits representing a reduction of one metric tonne of CO2 equivalent emissions. These credits have been sold to developed countries, earning India significant revenue in the process.
The CDM has also played a key role in supporting India's efforts to achieve its renewable energy targets. For example, the mechanism has helped to finance the development of large-scale wind and solar power projects, which have helped to increase the share of renewable energy in India's energy mix. Additionally, the CDM has supported the development of energy efficiency projects in a range of sectors, including the industrial, residential, and commercial sectors.
Climate change is a global problem, but it requires local solutions. In India, companies and communities are taking innovative steps to reduce carbon emissions and earn revenue through the sale of carbon credits. We'll take a closer look at three such initiatives.
Jindal Vijaynagar: Cutting Carbon and Earning Revenue with Cutting-Edge Technology
Jindal Vijaynagar, an Indian steel company that goes by JSW Steel, has successfully reduced 15 million tons of carbon emissions using an advanced technology known as the Corex Furnace. This innovative furnace not only reduces emissions but also makes the steel-making process more efficient. The company has announced that it will sell $225 million worth of saved carbon in the next 10 years. Corex allows for the direct use of low-grade coal in the ore reduction and melting process, eliminating the need for coke-making units. Additionally, the use of lump ore or pellets eliminates the need for sinter plants.
The benefits of Corex are clear. By eliminating the need for coke-making units and sinter plants, Corex reduces the overall carbon footprint of iron production. Additionally, the ability to use low-grade coal directly in the ore reduction process makes Corex a more cost-efficient method of iron production. Corex represents a major step forward in the world of iron production. By reducing greenhouse gas emissions and increasing cost-efficiency, Corex is helping to create a more sustainable and responsible future for the iron industry.
Powerguda of Andhra Pradesh: Turning Trees into Biofuel and Carbon Credits
In the village of Powerguda in Andhra Pradesh, the community has taken a different approach to reducing carbon emissions. By generating biodiesel from 4,500 Pongamia trees, the community has saved and sold 147 tons of carbon credits. This is not only good for the environment but also provides a source of income for the people of Powerguda.
Handiya, Madhya Pradesh: Restoring Forests and Earning Carbon Credits
The people of Handiya in Madhya Pradesh have taken a unique approach to carbon reduction. They have restored 10,000 hectares of degraded community forests, which not only reduces emissions but also provides a number of other benefits, including improved soil health, increased biodiversity, and better water management. The restoration of these forests has earned the community an estimated $300,000 every year from carbon payments.
In conclusion, the Clean Development Mechanism established under the Kyoto Protocol has been a major success in India, helping to promote sustainable development, transfer technology and financing, and earn significant revenue. India's experience with the CDM highlights the importance of international cooperation in addressing the challenges posed by climate change, and provides a model for other developing countries looking to benefit from the mechanism.