A Study: Future of Carbon Markets in India

Abstract

Climate change is a global environmental problem and can manifest itself in gradual shifts in temperature, precipitation and a rise in sea level. The changes in temperature have been associated with increasing concentration of atmospheric carbon dioxide (CO2) and other greenhouse gases in the atmosphere. Developing carbon credit market that motivates true reductions in carbon emissions must address all carbon pools and their GHG emission.

Study of future of carbon markets, carbon credit price fluctuations and how carbon credits are traded on Chicago climate exchange (CCX) to reduce GHG emissions is the topic of paramount importance. The research focuses on the future trends of carbon markets, growth of carbon market both allowance- based as well as project- based markets. We have tried to analyze three flexible mechanisms under Kyoto protocol that enable developed countries with quantified emission limitations and reduction commitments to acquire greenhouse gas reduction credits, how trading is going on Chicago climate exchange so that members of the exchange can earn Carbon Financial Instrument (CFI) contracts for any reductions that they are able to achieve below their defined reduction amount.

The future of global carbon markets is finely poised as recession threatens the political will to shoulder costs but New Zealand, Australia and Japan follow Europe with their own cap and trade schemes. Strong carbon markets depend on tough climate change goals is now under discussion in international talks to replace the Kyoto Protocol from 2013. Clear visibility is therefore limited to a four-year horizon, in a market tipped to exceed $100 billion in 2008. "(Comparing) the financial crisis and the post-2012 uncertainty, the uncertainty is a ten times bigger problem,” said Alex Wyatt, director of Emissions Zero, a project developer that advises Chinese companies on securing carbon finance under the Kyoto Protocol.

The Various factors such as global warming, Kyoto Protocol- the UNFCCC framework on carbon markets, carbon market classification and mechanism, carbon credit price fluctuations, factors determining carbon pricing and future of carbon markets are the topics studied under.