By IANS
Mumbai : India’s multi-commodity exchange (MCX) launched futures trading in carbon credits here Monday, the first exchange in Asia and third in the world to do so.
The process would help “producers earn remunerative returns out of environmentally clean projects,” Joseph Massey of MCX said at the launch.
Carbon Credits are generated by enterprises in the developing world by using cleaner technologies and, thereby, saving on energy consumption. This consequently reduces their greenhouse gas emissions.
For each reduced tonne of carbon dioxide emission, an organisation receives a carbon emission certificate, which it can sell, either immediately or through a futures market, just like any other commodity.
Carbon trading is carried out according to the UN convention on climate change. Under the Kyoto Protocol, the Clean Development Mechanism Executive Board of the UN issues carbon credits, or carbon emission reductions certificates.
Lamon Rutten of MCX said: “The market for trading in carbon emissions is estimated to be $60-70 billion annually. India is one amongst the global leaders having already generated close to 30 million carbon credits and has roughly another 140 million in the pipeline for sale, making it one of the largest beneficiaries in the carbon credit trade.
“The launch has provided a platform for Indian companies to be able to benefit from the adoption of cleaner technologies,” he added.
MCX entered into a strategic alliance with Chicago Climate Exchange (CCX) in September 2005 to initiate carbon trading in India.
Monday’s launch is expected to ensure better price discovery of carbon credits, besides covering risks associated with buying and selling.
The Indian exchange also expects its tie-up with CCX will enable Indian firms to get better prices for their carbon credits and better integrate the Indian market with the global markets to foster best practices in emissions trading.