CLIMATE CHANGE, CARBON TRADING and ASIA: first futures trading for Asia in Mumbai

India's Multi Commodity Exchange opens Asia's first-ever commodity exchange to offer trades in carbon credits - among the select few including Chicago Climate Exchange and the European Climate Exchange. Carbon credits are generated by enterprises in the developing world by using cleaner technologies and 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. Only time can tell if we are witnessing a "race to the top" or "tunnelling to the bottom", national gains and sub-national poverty or win-wins??

Source: Business Standard Reporter

Multi Commodity Exchange (MCX), the country’s largest commodity exchange, today launched futures trading in carbon credits - one of the fastest emerging intangible commodities in developing countries including India.The trading unit of carbon credits is fixed at 200 tonne. Today, five annual contracts are available on the platform with respective expiries on 15 December 2008, Dec 2009, Dec 2010, Dec 2011 and Dec 2012.The tick size has been fixed at Re 0.50 per tonne while the exchange has decided to facilitate delivery on the expiry of the respective contracts.The initiative makes it Asia's first-ever commodity exchange and among the select few along with the Chicago Climate Exchange and the European Climate Exchange to offer trades in carbon credits."The launch of carbon credits is significant as more and more countries are adhering to global carbon emission norms," said Joseph Massey, deputy managing director, MCX.Carbon credits are generated by enterprises in the developing world by using cleaner technologies and 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 under an UN-mandated international convention on climate change.Under the Kyoto Protocol, carbon credits, or carbon emission reduction certificates, are issued by the executive board of Clean Development Mechanism - the highest international body to register projects and issue credits.