At present, trading in carbon credits takes place on two stock exchanges - the Chicago Climate Exchange and the European Climate Exchange. MCX would soon become the third exchange in the world with a licence to trade in carbon credits. In the proposed tie up, CCX will help in price discovery of clean development mechanism (CDM) projects between buyers and sellers on the online exchange.
This development was confirmed by SK Panigrahi, planning commission director (environment and forest) and Joseph Massey, deputy managing director MCX.
Panigrahi told FE that the tie-up between the two exchanges for global online carbon trading would provide a platform for promoting spot and bilateral forward trading of carbon credits.
Further, Massey noted, "MCX will be the first commodity exchange in India to start trading in intangible goods. Carbon is becoming one of the hottest commodities in the global market.
Carbon trading has success stories especially for companies associated with power and energy, with investors predicting that it could soon become one of the largest markets in the world," he added.
Explaining the trading potential, Panigrahi said that surplus credits that were acquired by overshooting the emission reduction target could be sold in the global market. "One credit is equivalent to one tonne of CO2 emission reduced. Carbon credits are available for companies engaged in developing renewable energy projects that offset the use of fossil fuels," he informed.
Panigrahi hoped that India would benefit the most and acquire a 31% share of the total world carbon trade through CDM.
These projects are expected to rake in at least $8 billion to $10 billion (Rs 22,500 crore to Rs 45,000 crore) over a period of time," said Panigrahi.