CARBON TRADING IN THE INDIAN CONTEXT

Yesterday, while I was going through my friends' tweets, I came across a tweet informing about something called Blog Action Day 2009, which as per them, "is an annual event that unites the world's bloggers in posting about the same issue on the same day. Our aim is to raise awareness and trigger a global discussion." (http://www.blogactionday.org)

When I checked out the site, I found that this year's topic was one of my old favorites - "Climate Change". It reminded me of my Management Research Project that I had done during my MBA days. So, I started digging through my old CDs & Zip Drives and finally found out my old research paper. I have always been wanting to post it on my blog, but procrastination always got the better of me. But now, with the deadline of 15th October and with the exciting emotion of all the blogosphere writing on one common topic; which I feel is a very wonderful idea; here I am finally sharing my research paper in a nutshell.

To cut a long story short and to avoid the boring parts of the research, I am going to share with you all only the findings and the recommendations:

Findings:

• CDM projects Reduce global warming
• More companies adopting CDM Projects
• Emissions trading allows flexibility for emitters without sacrificing the environmental objective of reducing emissions
• Emissions trading can also encourage innovation in the reduction of greenhouse gas (GHG) emissions
• India, a Non Annexure I country; huge potential

Recommendations:

a) No adequate monitoring of sustainable development and local community benefits.
- Hence, the government should ensure that there is a separate governing body which can enforce stringent rules to overcome this.
b) No reduction in actual carbon emissions
- The companies should come up with alternative sources of energy to reduce the carbon emission
c) May result in increased local concentrations of emissions - Thus, there should be a clearing house which will look after the volumes being traded
d) Price is uncertain – determined by market
- The exchange should decided a daily price range to reduce this ambiguity
e) Eucalyptus used in carbon sink projects, degrades the soil
- The government should increase the awareness among the farmers and the aggregators should try to come up with other plants which don’t do any harm to the soil

Some of the important findings by me can be explained as given below:

As India is a non-annexure I country, hence it can sell CERs to the Annexure I countries and generate profit from the trade. Looking at the increasing rate of industrialization, it can be said safely that this is a profitable option for our country to generate foreign revenue.

During the project I came to know that the plants used for carbon trading is Eucalyptus. The main problem with it is that it degrades the fertility of the soil. Thus, even though the villagers are able to generate good amount of revenues in the short term. But, if we look at the long term perspective, I feel that in the end it is not a profitable option for the villagers, as their regular crops will get them lower but constant revenue always. Whereas, in the case of eucalyptus plantations for the carbon trading, the soil after a point of time becomes infertile, rendering the farmers useless.

Finally, the "Carbon Trading" doesn’t help in reducing carbon emission, but in a way helps in covering up the emissions. So, newer and more effective ways should be used to control the carbon emissions.