Coming soon-ENRON SCAM

Know How The Six Consecutive years Fortune 500 Award winning comapany, for Innovation , Got bankrupt in 24hrs

"With claimed revenues of $111 billion in 2000, it took Enron only 15 years to achieve all this glory.

And ironically it took Enron only 24 hours to go bankrupt"

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Riddhiman Jain

CarBon Credits-A Concept Simplified.

Emission & Carbon Trading

o In the highly developed arena of global capitalism everything has its price

o concentration of CO2 is increasing in the atmosphere.

o increase in CO2 à increase in earth’s temperature

o Leads to increased hurricane or drought

o Ways to decrease the rate of increase in the conc. Of CO2

o reducing use of fossil fuels

o reducing the rate of forest land conversion

o Proposals of injecting CO2 deep into the earth or into the ocean

o CARBON TRADING MARKETS

EMISSIONS TRADING

o Emissions trading is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants

o In this case companies or other groups that emit the pollutant are given credits or allowances which represent the right to emit a specific amount.

o The total amount of credits cannot exceed the cap, limiting total emissions to that level.

o Companies that pollute beyond their allowances must buy credits from those who pollute less than their allowances or face heavy penalties.

o This transfer is referred to as a trade.

o In simple words, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions.

o Thus companies that can easily reduce emissions will do so and those for which it is harder will buy credits which reduce greenhouse gasses at the lowest possible cost to society.

o Corporations can retire pollution credits by donating them to a nonprofit and then be eligible for a tax deduction.

o Allowances are accounted for in the balance sheet of the company as intangible assets.

o Because emissions trading use markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism.

o Several trading market but European Union is the largest.

o Carbon market makes up the bulk of these and is growing in popularity.

CARBON TRADING

o Carbon trading <= Emission Trading

Problem

o Carbon emissions into the earth’s atmosphere have resulted in drastic climatic changes.

o And we know these changes have negative impacts

SOLUTION

o NGOs for long have been screaming for everybody’s attention towards this huge problem

o But no one seems to care enough, until there is a financial incentive attached to it.

o So, carbon trading is a trading mechanism where companies gain a monetary benefit out of polluting the air less.

o Word Carbon trading involves the creation and transfer of carbon rights from one party to another. The trade requires the measurement, allocation and reporting of these carbon rights or "carbon credits"

POTENTIAL BUYER

o Potential buyers for Carbon credits are entities; typically a business that emits CO2 to the atmosphere may have an interest or may be required by law to balance their emissions through mechanism of Carbon sequestration.

o These businesses may include power generating facilities or many kinds of manufacturers.

POTENTIAL SELLER

o Potential seller for carbon credits are entities that manage forest or agricultural land might sell carbon credits based on the accumulation of carbon in their forest trees or agricultural soils.

o Business entities that reduce their carbon emission may be able to sell their reductions to other emitters.

Personal Carbon Trading

o It’s a proposal and there are no working schemes currently in existence.

o Its an act of equally allocating emissions credits to individuals on a per capita basis, within national carbon budgets.

o Individuals would then have to surrender these credits when buying fuel or electricity.

o Individuals wanting or needing more energy would be able to partake in emissions trading to secure more credits, just as companies do

o Carbon allowances, more likely to be called ’carbon credits’ would be issued at no cost to individuals and surrendered electronically when purchasing fuel and electricity.

o People using less than their share could sell the surplus to people or businesses using more than their allotted share, via a market.

o In this way, it would provide an incentive for every individual to take steps to reduce their ‘personal emissions’, in other words, the emissions for which they are directly responsible.

CARBON CREDIT

o Key component of emissions trading schemes.

o Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air

o Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price.

o Emissions become an internal cost of doing business and are visible on the balance sheet alongside raw materials and other liabilities or assets.

Example:

o Consider a business that owns a factory putting out 100,000 tonnes of greenhouse gas emissions in a year.

o Its government then enacts a law that limits the emissions that the business can produce.

o So the factory is given a quota of say 80,000 tonnes per year.

o The factory either reduces its emissions to 80,000 tonnes or is required to purchase carbon credits to offset the excess.

Other Solutions:

1. It can either offset emissions by planting a number of trees for every carbon credit
2. Or it can invest in new low-emission machinery and have a surplus of allowances as a result.

In either solution both the buyer and the seller would submit accounts for their emissions to prove that their allowances were met correctly.

There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis.

CARBON FARMING

o It tells us how forest landowners can get involved in carbon trading.

o Landowners can accumulate carbon by planting trees where no trees currently exist (i.e., afforestation).

o The carbon accumulating in trees can potential be sold as carbon credits.

o Enhancing the growth of your forest to accumulate carbon more quickly (i.e., fertilization) may also generate tradable carbon credits as can the accumulation of carbon in forest soils.

On the other side:

o Carbon Trading means à "permission" to put a given amount of CO2 (like a metric ton) into the atmosphere.

o Those who are polluting less will sell credits to those who are polluting more

o It continues to allow those who are rich enough to afford to add greenhouse gases to the atmosphere.

o Those that are not wealthy will end up being penalized the most.

o But the end result is that the greenhouse gases won't have decreased any.

o It's kind of like a kid spreading the food around on his plate to make it look like he's eaten it.