Carbon trading: A tool to control global warming

Abstract

In current scenario Global Warming has given rise to a new form of commerce i.e. the carbon trade. Carbon trading is advance format where firms or countries buy and sell carbon permits as part of a program to trim out carbon emission. It is a widespread method countries utilize in order to meet their obligations specified by international Kyoto Protocol (1997) of United Nations Framework Convention on Climate Change; namely the reduction of carbon emissions in order to mitigate future climate changes. It specifically targets carbon dioxide calculated in terms of CO2 equivalent or CO2.  India signed and ratified the Kyoto Protocol in August 2002. Since India is exempted from framework of the treaty, it is expected to gain from the protocol in terms of transfer of technology and related foreign investments. India was an early player in the market and was doing well, but after the entry of China in 2005, it gradually out performed Indian the carbon market. The objective of the paper is to discuss the regulatory mechanism of carbon trading in international market with special reference to opportunities for the emissions market in Indian context.