India churning out more carbon copies

New Delhi: The carbon trading market has tripled to $30 billion in 2006, driven by trading of European Union Allowances (EUA) and the project transactions under clean development mechanism (CDM) in which developing countries like India are involved. As a supplier, India’s market share in the CDM has gone up since 2005. These are the findings of the State and trends

of the carbon market, 2007, which is managed by the World Bank Institute.
The CDM mechanism enables candidates in developing countries like India and China that have no mandatory obligation to reduce their greenhouse gas (GHG) emissions, under the Kyoto Protocol, to implement emission reduction projects and encash the results. With each tonne of carbon dioxide emission reduced, one CER is claimed. EUAs are equivalent to CERs but are traded among European Union members that have emission caps.

Released on May 2 at the Carbon Expo held in Germany, the report says the UK has taken the lead among buyers in the CDM market, with 50% market share in 2006, up from 15% in 2005. Next comes Italy that has a share of 10% in the CDM market. In 2005, Japan was the market leader with 46% share, followed by the UK.

Among sellers, China has occupied a massive share of 61% (73% last year), followed by India with 12% (3%). CER prices were up marginally in 2006, says the report. Prices stood in the range of $8-14 per CER.

China has set a relatively stable price floor for global supply of CERs, the report says.

The report adds that the developing countries have contracted one billion tonnes of GHG reductions and are on track to bring an additional billion tonnes to the market by 2012. Developed countries that have ratified the Kyoto Protocol are meant to reduce their emissions by 5.2% of the total GHG emission level of 1990.

“The figures show the important contribution of the developing world to climate change mitigation. The additional billion tonnes from developing countries amount to half of what Japan and the European Union together need to reduce — from now till the end of the Kyoto Protocol commitment period,” World Bank financial specialist and the report’s co-author Karan Capoor said.