[sbinews] Trading in Carbon Credits

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Wed, 24 Dec 2003 12:56:36 +0500

 Emission trading doubles to 70m tonne in '03

Volumes in the international carbon market are soaring. According to a report 
by the World Bank, about 70m tonnes (mt) of emission reductions have been 
traded in ‘03. This is more than twice the figure for last year. The big buyers 
of the emissions include the Dutch government, the World Bank via Prototype 
Carbon Fund (PCF) and Japanese private firms. 

Carbon trade is between polluters who want to bring down carbon-dioxide 
emissions and projects that actually bring these down. Projects that result in 
lower emissions can then sell the ‘carbon credits’. The volumes for ‘01 and ‘02 
stood at 13mt and 29mt respectively. Of the total trades in ‘03, Latin America 
accounted for 40mt and Asia for about 20mt. 

As of now, most of the new projects are coming up in Brazil and India . Over 
the next several years, India and China are expected to account for a bulk of 
the new projects. The report mentions that 10 agreements for project activities 
— including wind-farms and biogas projects — have been signed in India during 
the year. In the near term, the total value of carbon credits exported by India 
could reach around $100m per annum, feels Surya Sethi, advisor (energy), 
Planning Commission. 

While most of the carbon reduction projects were in transition economies and 
developing countries, the poorest countries in Africa and Asia have very few 
projects. The World Bank expects clean technologies being transferred to 
economies in transition and developing countries, where abatement costs are in 
general lower than in developed countries. 

There is no formal “carbon-market” as of now, and most of the deals are over 
the counter. The two biggest buyers — the Dutch government and the World Bank’s 
Prototype Carbon Fund — accounted for 30% and 26% of the market, respectively. 
The report has identified three major classes of customers — companies seeking 
to comply with their national norms, as is the case in the UK; companies buying 
to offset their forecasted Kyoto obligations, which includes the Dutch 
government and the PCF; voluntary reduction programmes such as the 
recently-opened Chicago Climate Exchange. 

Prices for trades for Kyoto compliance ranged from $3/tonne to $6.5/tonne. 
Other trades ranged from $2 to $3 per tonne. At this rate, the worldwide carbon 
market is expected to be around $300m in ‘03. The total volume of 70mt is less 
than 0.1% of the 8-bn tonnes of carbon dioxide emissions worldwide and the 
market is still in a nascent s

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