CARBON CREDIT
BACKGROUND:
Conservation of Environment is the ultimate need in present scenario. Thousand acres of Jungles/forests were destroyed under the sweet name of DEVELOPMENT. Situation is going worsen because we are committed to grow @10% GDP hence industrial revolution in terms of growth is inevitable, but its impact on environment is neither considered by Public nor by Government. Uncontrollable pollutants and some GHG such as hydro fluorocarbons, methane, and nitrous oxide are released as bye product of certain industrial process, which adversely affects the ozone layer, leading to Global Warming, which is today’s buzz word !
Few Environmentalists are in existence but are helpless as their work is ignored by public at large. Wholesale Price Index is soaring like anything thus citizens are hardly interested in gravity of pollution Air, Water or Environment. This is the present situation! It can be observed not only in India but also in all developing countries like China, Brazil etc.
Today, we cannot simply have walk on pedestrian, in fast growing cities like Pune, Kolkata, Bangalore, Cochin, Hyderabad etc. Industries are emitting thousand tons of carbon dioxide (CO2) into environment, which leads to Asthma, hypertension and other diseases of lungs and hearts. Moreover it affects on environmental cycle and other living creatures. We shall not indulge the right to live of other living creature, which we are doing in sake of development /progress of human being.
Thus, though it is not feasible to reduce the emission of environmental pollutant but the goal is to stop the increase of CO2 or green house gases from its present emitting level.
HOW CARBON CREDIT WILL HELP?
Scientists predict that, we need to decrease global CO2 emissions by at least 50 per cent of current levels by 2050 to stabilize global CO2 levels and prevent further climate change. But decreasing the use of fossil fuels is a slow process. Looking for other alternatives such as growing more trees or not cutting more trees, which we would otherwise be, will solve only part of the problem.
While finding solution to the problem, the concept of ‘carbon credit’ came into vogue as part of an international agreement, popularly known as the Kyoto Protocol
Carbon Credits (CCs) is a relatively new concept, and these are bought by a buyer in the industrial sector needing to offset the CO2 emitted in the atmosphere through their manufacturing activities.
A CCs is a generic term meaning that a value has been assigned to a reduction or offset of greenhouse gas emissions. One carbon credit is equal to one ton of CO2 or equivalent gases.
Generally industries like power, cement, steel, textile, fertilizer and such other are emitting more carbon to the environment. Thus in order to control the same, emission quota is permitted to each industry based on its activity. The goal is to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions.
The following example will explain how CC works.
Suppose a group of environmentalist is applying such devises or plants enough trees in order to reduce emission by one ton, then group will be awarded with a credit. If manufacturer has an emission quota of 10 tons but is expecting 11 tons can purchase this CCs from environmentalist group.
The CC system looks to reduce emissions by having countries honor their emission quotas and offer incentives for being below them. CCs are “Entitlement Certificates” issued by the United Nations Framework Convention on Climate Change (UNFCCC) to the implementers of the approved Clean Development Mechanism (CDM) projects.
Carbon trading is an application of an emissions trading approach. GHG emissions are capped and then markets are used to allocate the emissions among the group of regulated sources. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world.
The concept of CCs came into existence as a result of increasing awareness of the need for controlling emissions. There are also many companies that sell CCs to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects.
INDIAN OUTLOOK - ENVIRONMENT MANAGEMENT & CARBON CREDIT
India has not signed any of the agreement in this context and its place is no where in carbon trading. Being a delegated state, India made it adhere with Euro Norms. Recently compulsion to comply with Euro-II emission norms is very confident step towards controlling air pollution. Furtherance to this policy, Auto Goliaths like Maruti Suzuki have removed its Models like Maruti – 800 and Omni, from Market. It is now become essential for companies to make environmental considerations as a part of their business decision making.
The enactment of the Information Technology Act, 2000 has enabled the industry to kick-start the use of electronic mode as a valid legal medium for carrying out its business operations which were until now done compulsorily on paper. This includes initiatives like MCA e-filing, Income Tax e-filing, SEBI Reporting and other electronic communications via, emails and video conferencing
ROLE OF PROFESSIONALS AND VIGILANT CITIZENS
India acceded to the Kyoto Protocol in August 2002 and one of the objectives of acceding was to fulfill prerequisites for implementation of Clean Development Mechanism (hereinafter referred to as CDM) projects. India is still not a signatory to the Kyoto Protocol, which in a way, is a road-block for effectively carrying out environmental management by the industries. Currently companies like Jindal Stainless, Essar Steel, Hyderabad Chemicals, Paschim Hydro Energy Pvt. Ltd, The Andhra Pradesh Paper Mills Ltd, have been making use of market based instruments like Carbon Credits in their businesses.
It is a need of the hour for Company Secretaries, Chartered Accountants, Lawyers, Cost Accountants and other Management professionals / Consultants to put up their say in the management of their respective organisations (financial, manufacturing or services) and be a part of the decision making more proactively & aggressively.
1. The various industry Chambers like FICCI, ASSOCHAM, CII should step up for Market Based Instruments for Carbon Trading.
2. These trade organizations can also come up with some award program to the Companies which religiously follow the norms to motivate them
3. Introduction of corporate-run carbon funds
4. Introduction of Government-run carbon programmes.
5. We, professionals, should stress upon and make the company management aware of the benefits of such market based instruments
6. Awards like ‘Best Green Idea’ for employees coming up with suggestions; ideas, ways, etc. should be introduced.
7. Ask the management of our respective organisations to take help of the MBIs wherever feasible.
8. Computer-based entrance tests for educational courses.
9. Organizations can also come up with policies like to use of metal water bottles in place of plastic water bottles which is sanitary, easy to clean and is capable of being used over and over.
10. Organizations can also encourage use of reusable lunch bags / cups etc. in their cafeteria / lunch rooms which helps in avoiding use of plastic / paper, use of hand towels in toilets and lunch rooms instead of paper towels and electric dryers.
Multi-Commodity Exchange (MCX) has taken a pioneering effort to launch Carbon Credit Futures in India in January 2008 and has been recognized as India’s First Green Exchange. This has enabled Indian owners of Clean Development Mechanism (CDM) projects under the Kyoto Protocol to sell the carbon credits they have earned, at the correct market prices without having to negotiate or bargain. This has done away with many of the problems Indian SMEs faced in the global carbon credits market.
Further, National Commodity and Derivatives Exchange (NCDEX) also launched a futures contract for carbon credit issued under United Nations Framework Convention on Climate Change on its exchange platform in April 2008. NCDEX is the second exchange in the country after MCX which started carbon credits futures.
On individual level, we professionals can contribute in the following way:
1. To advise in implementing effective waste management systems.
2. To assist in registering our manufacturing units under Indian Green Building Council and products under Bureau of Energy Efficiency voluntarily; though for some the registration is mandatory.
3. Internal policies to encourage paperless communications
4. Policies for minimum use of paper (double side printing), avoidance of wastage and re-cycling of waste paper and therefore, saving trees – a natural resource.
5. We can also assist in encouraging our fellows in full utilization of software applications, for example execution of daily work in soft copies rather than printing (Eg. Excel Macros for data processing, analysis, etc.). This way, we will solve two problems i.e. space for storage of physical records and availability/ accessibility of all records at a centralized server hence, reducing dependence on human factor. We all are aware that most of the official communications can be done through email/video conferences. We professionals can advise our managements / fellow employees to adopt such practices.
6. We, professionals, need to refer to many laws for which we purchase bulky books every year. Here, we can purchase CDs instead of those books, which will reduce substantial use of paper and storage and will be easy to use.
7. Use of Solar systems instead of Electric devises like heater etc.
8. We can advise our managements to come up with policies to reduce wastages, be it paper, electricity or any other. Policies on travels can also be modified to discourage air travel at all levels of management. A small change can add a big thing to the concept of “Go Green”.
9. Plant trees
10. Gift plants instead of flowers
11. Use Public Transport/ carpool/ Alternate fuel
12. Always carry a re-usable carry bag
13. Use energy saving equipments
14. If possible use laptops instead of desktop.
15. Consider using solar energy for lighting, heating etc.
16. Conserve water – attend to leaking water taps, water plants late evening or early morning, use low flow shower heads, etc
17. Take print-outs only when necessary.
18. Try to pay bills etc. on-line.
CONCLUSION:
According to industry estimates, Indian companies are expected to generate at least $8.5 billion at the going rate of $10 per tonne of CER. Tata Sponge Iron Ltd got a CDM certificate from the UN for its waste heat recovery project in Orissa. Reliance Energy already has energy efficiency and process development CDM projects.
It’s the need of the hour to think very seriously on reducing environment loss by religiously following & implementing and innovating techniques & ways to contain the same. This is a high time to call a revolution for reducing carbon footprint in order to preserve what’s left of the ozone layer, which is a protective layer between sun’s harsh ultra violet rays and the living beings. Otherwise, the day is not far when the world will be full of hunger; sun burnt, blind people, scary sounds and many more incurable diseases.
It is urging to each one of us to adopt a ‘Go Green’ approach in each of your activities each day in order to enrich our lives. After all, “we do not inherit the earth from our ancestors; we borrow it from our children."
Let us join hands together to save the earth.
CS Avinash Abhyankar
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