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Monday, August 23, 2010

Emission Trading and achieving development objectives

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An administrative approach at global level that tries to keep control on pollution by producing economic incentives for achieving reduction in the emission of pollutants is called as Emission Trading. Along the same line the carbon Trading can be defined as – The administrative approach which is used to control emissions by providing economic incentives for achieving reductions in the emissions of carbon dioxide and its compounds is called as carbon trading.

In emission trading, a central authority or a government agency fixes a limit on the amount of a pollutant that can be emitted out. The pollutants- emitting bodies (companies, groups or industries) are given credits or allowances which represents the right to some particular pollutant only in a limited amount. The companies or the industrial units that pollute beyond their allowances are pressurized to buy credits from those who pollute less than their allowances. This transfer is called as a trade. If these rules are applied for carbon related pollutants like carbon dioxide or carbon monoxide gases, then the trade of this type is called as carbon trading.

The aim of Carbon Trading or the emission trading is to air reduce pollution at global level. In carbon trading, free market is used in order to determine how to deal with the problem of air pollution. The industrial units can reduce their emissions by applying whatever the technology these companies want to apply.

The countries of the world that have signed the treaty of the Kyoto- protocol of 1997 (126 countries) are under obligation to reduce their green house gas- emissions or to pay a price for that. The central idea behind it, was to make developed countries pay for their carbon emissions while at the same time monetarily rewarding the countries cutting down the GHG emissions. Suppose if a company in India applies Clean Technology and cuts x-tones of carbon emission, it can sell this carbon to a company located in, suppose- United States, which emits more GHGs.

Many countries of the world have started cutting in the emission of carbon on their own levels.According to a report published in The Times of India(July 2010)-
China will start carbon trading in domestic businesses during the next five-year plan beginning in 2011 with an aim to reduce carbon emission. The decision was made at a closed-door meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission (NDRC), and attended by officials from related ministries, enterprises, environmental exchanges and think tanks, China Daily reported Wednesday quoting an unnamed participant. 

"The consensus that a domestic carbon-trading scheme is essential was reached, but a debate is still ongoing among experts and industries regarding what approach should be adopted," the paper quoted the source as saying. 

The meeting concluded that such efforts are self-imposed and should be strictly separated from ongoing international negotiations for a successor to the Kyoto Protocol to fight global warming, the source said. 
Experts say, the carbon trading programmes aimed at shifting towards low-carbon economy by pushing the market to adopt energy efficient measures will help China meet its energy intensity target. 

As a developing country, China does not shoulder legally binding responsibilities to reduce carbon emissions, according to the basic principle set by the United Nations Framework Convention on Climate Change. 
However, putting a price on carbon is a crucial step for the country to employ the market to reduce its carbon emissions and genuinely shift to a low-carbon economy, industry analysts said. 

China has mostly relied on administrative tools to meet its 20 percent energy intensity reduction target between 2006 to 2010. To that effect, the country's top 1,000 energy consumers have signed contracts with the central government to improve their energy efficiency.

But with rising energy demand, administrative measures are too expensive for the country to meet its future energy conservation targets - something that was also agreed at the meeting, said Tang Renhu from the low-carbon centre at China Datang Corporation who also joined the discussion. 

Although China has refuted the International Energy Agency's label of being the world's top energy consumer, its energy consumption for 2009 stood at 2.132 billion tonnes of oil equivalent, according to the National Bureau of Statistics. "The market-based carbon-trading schemes will be a cost-effective supplement to administrative means," said Yu Jie, an independent policy observer who previously worked for several international climate-related institutes. 

Possible sectors for piloting carbon trade projects include carbon-intensive industries such as coal-fired power generation, Tang said. China has pledged to cut its carbon emissions per unit of economic growth by 40 to 45% by 2020.

The GoI has identified the following project ideas(TERI)  in accordance with its development objectives.
· Removal of implementation barriers of biomass-based power generation.
· Strategy for removing barriers in achieving industrial energy efficiency.
· Carbon reduction through grid-interactive PV power generation.
· Energy conservation through technological upgradation of steel rerolling
· Solar PV diesel hybrid systems for decentralized village electrification.
· Cogeneration in cement plants.
· Carbon emission reduction in power plants.
· Decentralized rural electrification through biomass and solar energy
through private participation.
· Switching to non-petroleum fuels, electricity-powered and hybrid
engines in transport sector.
· Demand-side management in basic material and construction industry.
· Improving efficiency of rural agriculture pumpsets.
· Energy conservation in paper industry.

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