The composting plant in Okhla, New Delhi has become the first in India to receive the carbon credits from the United Nations Framework Convention on Climate Change (UNFCCC). The plant has received Rs 25 lakh as an advance against the Carbon Emission Reduction (CER) earnings from this plant.
What are carbon credits?
Carbon credit is a generic term for any tradable certificate or permit representing the right to emit One Tonne of Carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide. The concept of carbon credits came into existence as a result of increasing awareness of the need for controlling emissions. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Marrakesh Accords.
Carbon credit facility has been introduced with an aim to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions or less carbon intensive approaches than those used when there is no cost to emitting carbon dioxide and other Green House Gases (GHGs) into the atmosphere. Since GHG mitigation projects generate credits, this approach can be used to finance carbon reduction schemes between trading partners and around the world.
The carbon credits can also be traded on exchanges like Carbon Trade Exchange, which is like a stock exchange for carbon credits. If it is traded internationally then each transfer is validated by the UNFCCC.
Exchanges trading Carbon Credits:
Currently there are 5 exchanges trading in carbon allowances:
- The European Climate Exchange
- NASDAQ OMX Commodities Europe
- Commodity Exchange Bratislava
- The European Energy Exchange