New Delhi: Carbon traders and consultants in India say Australia’s decision to ratify the Kyoto Protocol will increase the global demand for carbon credits.
The Clean Development Mechanism (CDM), part of the Kyoto Protocol, allows companies in developing countries such as India to earn carbon credits from the so-called clean projects that curb the emission of carbon dioxide (CO2). These credits could be purchased by projects in the developed countries to comply with carbon emission norms.
Australia’s new Prime Minister Kevin Rudd signed on the protocol on the opening day of the biggest ever conference on climate change being held in Bali, Indonesia.
“Australia’s signing will definitely give a positive push to the carbon market beyond 2012. Although it might take time for Australia to actually get into carbon trading but within a year or two, Australia’s entry will definitely push up the price of carbon credits,” said an Indian carbon market trader, who did not wish to be identified.
According to greenhouse gas emission targets set in Kyoto, Australia is allowed an 8% increase in CO2 emissions in the commitment period of 2008-2012. In case of emisssions beyond the 8% limit, Australia will have to buy carbon credits from elsewhere. According to the Human Development Report 2007, prepared by the United Nations Development Programme, between 1990 and 2004, Australia’s emissions grew by approximately 17%, but its share in the world total was slightly down from 1.2% to 1.1%.
Australia’s carbon footprint (CO2 emissions per capita), however, is quite high at 16.3 tonnes/per capita. India’s carbon footprint is 1.2 and the US has a footprint of 20.6.
Tony Mohr of the Australian Conservation Foundation, the country’s leading non-profit organization dedicated to the environment, said the country could reduce its emissions by removing fossil fuel subsidies, while calling for a 25% renewable energy target by 2020.
“Apart from the benefit of carbon revenue, Australia’s approval of the protocol also means that now there is a better chance of a consolidated global carbon market, instead of fragmented local markets in the EU, Japan and the US,” said thecarbon trader.
The world carbon market is growing at $100 billion (Rs3.9 trillion) annually, of which India has the largest share of carbon reduction projects. Of the credits issued, India has almost 34% share, followed by China, at 25.1%. In terms of registered projects, India has 34.5% share of the world total and China has 15.7%.