Now it is new trend to make money out of the smoke others release. Sounds Wired? Kyoto Protocol, which is signed in in 2005 had lead to a new way of making money for the developing countries from the developed countries. Wonder how? Kyoto protocol, which had been signed to reduce the Carbon-di-oxide level in the atmosphere by 141 countries including E.U, Japan, Canada, with some exceptions like U.S.A, Australia, which are in he exception manifesto, due to high emission of CO2. In the Kyoto protocol, it is mentioned that Carbon can be traded for money like other commodities, but in a quite different way. The term “Carbon Credit” is used for the purpose of measurement in the trading. The country which controls CO2 emission more, will earn more Carbon Credits. One Carbon Credit is equivalent to One Tonne of CO2.
So, the Developed Countries can buy those carbon credits from the developing countries like India, where the emission of CO2 is quite below than the target level fixed by the Kyoto Protocol. Now, If India holds a quite good count of “Carbon Credit”, it can sell the credit to the Developed Countries like U.S for money and use that money to control the CO2 emission into atmosphere by various means of stopping the GHG ( Green House Gases ), like planting more trees etc.
Now, the stage is set for Credit Emission Reduction (CER) trade to flourish. India is considered as the largest beneficiary, claiming about 30%-31% of the total world carbon trade through the Clean Development Mechanism (CDM), which is expected to rake in at least $5-$10 bn over a period of time.
The value of a carbon credit is influenced by the amount of tax levied on the carbon or other greenhouse gas emissions, the penalties provided for exceeding an agreed upon emissions target, the cost to achieve the reduction, and traditional demand and supply of the reduction product.
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