Future prospectus of carbon credits and carbon trading from an Indian perspective

Abstract

These days there is a growing concern and increasing awareness on global warming and pollution control throughout the world. The average temperature of the earth's surface has risen by 0.74 degrees C since the late 1800s and it is expected to increase by another 1.8° C to 4° C by the year 2100 – a rapid and profound change – should the necessary action not be taken. Even if the minimum predicted increase takes place, it will be larger than any century-long trend in the last 10,000 years. The principal reason for this is a century and a half of industrialization: the burning of ever-greater quantities of oil, gasoline, and coal, the cutting of forests, and the practice of certain farming methods. These activities have increased the amount of "greenhouse gases" in the atmosphere, especially CO2, methane, and nitrous oxide. Such gases occur naturally and are critical for life on earth; they keep some of the sun's warmth from reflecting back into space, and without them the world would be a cold and barren place. But in augmented and increasing quantities they are pushing the global temperature to artificially high levels and altering the climate. In addition to the problem of global warming, the world’s energy scenario also seems to be heading into troubled times ahead. World energy consumption is projected to increase by 57% from 2004 to 20301 with total energy demand in the non-OECD (Organization for Economic Cooperation and Development) countries increasing by 95%, compared with an increase of 24% in the OECD countries. Global energy demand grows despite the relatively high world oil and natural gas prices that are projected to persist into the mid-term outlook. World use of petroleum and other liquids grows from 83 million barrels oil equivalent per day in 2004 to 97 million barrels per day in 2015 and 118 million barrels per day in 2030 in the reference case. Natural gas consumption increases on average by 1.9% per year in the reference case and world coal consumption is projected to increase from 114.5 quadrillion Btu in 2004 to 199.1 quadrillion Btu in 2030, at an average annual rate of 2.2%. The use of all these fossil fuels has major environmental implications in addition to the problem of fast depletion. About half of the world’s households use solid fuels (biomass and coal) for cooking and heating in simple devices, causing air pollution that is probably responsible for 4–5% of the global burden of disease and also contributing to global warming due to the emission of greenhouse gases (GHG). It is in order to devise a solution to this problem that the Kyoto Protocol was formulated in 1997 to enforce mandatory targets on GHG emissions for the world’s leading economies who choose to accept it.