A study on carbon trading and its effectiveness in implementation of Corporate Social Responsibility

Nidhi Sharma, Supriya Maheshwari


Carbon dioxide has become a major cause of global warming as it is amongst the primary green house gases produced by combustion of fuels. As it is rising at an alarming rate, it becomes imperative to deal with this devil. Keeping this in mind, a mechanism called Kyoto Protocol was introduced by United Nations. The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005.  It is an agreement between nations that binds 37 industrialized countries and European community to reduce the emission of greenhouse gases. There are three mechanism under this protocol namely, Emissions trading – known as “the carbon market”, Clean development mechanism (CDM), Joint implementation (JI). A company/country has two ways to reduce emissions, either it can reduce the level of emission of greenhouse gases by adopting new technology or improving upon the existing technology to attain the new norms for emission of gases or it can tie up with developing nations and help them set up new technology that is eco-friendly, thereby helping developing country like India and China. The paper focuses on a measure called Carbon Trading suggested under Kyoto Protocol wherein countries that have high carbon emission level can trade them with the countries with low emission level of carbon. Further, the paper explains the procedure of carbon trading like how the trading takes place at Multi Commodity Exchange (MCX) and also discusses the advantages and drawbacks of the trading with special reference to India. The paper advocates the inclusion of Carbon Taxes as an additional measure apart from Carbon Trading. Finally it concludes that though it is a milestone in the process of protecting environment form the effect of green house gases but it should be used along with another measure known as Carbon Taxes in order to ensure better protection of environment

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ISSN : 2251-1547