CERs are part of the Clean Development Mechanism (CDM) initiated by the United Nations Framework Convention on Climate Change (UNFCCC), which allows emission-reduction projects in developing countries to earn CER credits, each equivalent to one tonne of carbon dioxide. These CERs can be traded and sold, and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol. Under the CDM, emission-reduction (or emission removal) projects in developing countries can earn certified emission reduction credits. Countries listed in Annex I (developed) of the UNFCCC can purchase CDM credits. Non Annex-I countries (developing) can host CDM projects. And that's not all. While investors profit from CDM projects by obtaining reductions at costs lower than in their own countries, the gains to the developing country host parties are in the form of finance, technology, and sustainable development benefits. Projects are related to energy efficiency, transport and methane recovery, among others.
India on the green path
With Indian firms evidently entering the domain in a big way, carbon trading seems to be the way forward for India Inc to contribute to a reduction in GDP emission intensity by 20% by the year 2020. The sector is estimated to be over R1,000 crore in size. India currently has 15% share in
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