A Project Report On " Carbon Emissions Trading in India": Department of Business and Industrial Management

A
Project Report on
“ CARBON EMISSIONS TRADING IN INDIA”
A Report Sumitted to
Department of Business and Industrial Management
Veer Narmad South Gujarat University, Surat
For,
Partial requirement for the fulfilment of the degree of
Master of Business Administration (MBA)
Submitted by:
Vora Drashti Nareshbhai
SPID No: 2021070207
Under the guidance of
Ms. Foram Modi
Department of Business and Industrial Management
Veer Narmad South Gujarat University, Surat
April - 2023
CERTIFICATE OF DEPARTMENT
DEPARTMENT OF BUSINESS AND INDUSTRIAL

MANAGEMENT
VEER NARMAD SOUTH GUJARAT UNIVERSITY
PROJECT COMPLETION CERTIFICATE
This is to certify that Ms. Vora Drashti Nareshbhai, SPID No: 2021070207,
a SYMBA (Finance) student, has completed and submitted her Project as a
part of MBA curriculum. She has successfully completed a study on “
CARBON EMISSIONS TRADING IN INDIA” in April 2023 as per the
guidelines given by Veer Narmad South Gujarat University, Surat. This project
is undertaken under the supervision of Ms. Formal Modi, faculty at Department
of Business and Industrial Management. The project work done by the student
comprises the results of independent and original investigation carried out.
_______________________ _____________________
Ms. Foram Modi Dr. Manish Sidhpuria
(Project Mentor) ( Head of Department)
Department of Business and Department of Business and

Industrial Management, Industrial Management,
VNSGU, Surat. VNSGU, Surat.
I. DECLARATION
This is to certify that I, Ms. Drashti Vora has completed the Project study
titled “ CARBON EMISSIONS TRADING IN INDIA”. Under the guidance of Ms.
Foram Modi in partial fulfilment of the requirement for the degree of Master of
Business Administration at Department of Business and Industrial Management, Veer
Narmad South Gujarat University, Surat. This is an original piece of work and I have
not submitted it earlier elsewhere. I further declare that all the data and information
collected throught secondary sources are duly acknowledge in the report.
Date: 13th April, 2023 ____________________
Place: Surat Drashti Vora
SPID No: 2021070207
Department of Business and Industrial

Management, Surat
II. ACKNOWLEDGEMENT
My sincere efforts have made me to accomplish the task of completing this Project
study. However, it would not have been possible without the kind support and help of
many individuals.
Firstly, I would like to thank our honourable Head of Department Dr. Manish
Sidhpuria , who always work and think in the direction of betterment of the students
and institute as well as supporting us with all the necessary resources to finish our two
golden years of post graduation.
I wish my heartfelt thanks to all the faculties of the department to enlighten the
knowledge of the subjects and enhance the learning in various aspects of life as well.
Not only this, but they always motivate us to fulfil our dreams and lead us in the
direction of growth. They gave us valuable inputs for effective completion of this
project.
I cannot forget the contribution of my project guide, Ms. Foram Modi, without the
support of whom I would have never completed this project. Her constant help,
guidance and continuous teaching has given me so many inputs on academics as well
as non- academic front.
Finally, words are not sufficient to express gratitude. My cherished family members,
friends and all the other persons directly or indirectly engaged with me and supporting
me. Without their encouragement and support I would not have reached at this stage.
13th April 2023, Vora Drashti N.
Surat
TABLE OF CONTENT
CHAPTER CHAPTER NAME PAGE
NO. NO.
1
1 INTRODUCTION OF THE TOPIC
27
2 LITERATURE REVIEW
33
3 RESEARCH METHODOLOGY
34
3.1 Problem Identification
34
3.2 Research Objective
35
3.3 Research Design
36
3.4 Data Collection
37
3.5 Sampling Design
37
3.6 Data Processing
38
3.7 Limitations of the Study
38
3.8 Structure of the Report
39
4 DATA ANALYSIS AND
INTERPRETATION
54
5 FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
63
Bibliography
LIST OF TABLES
TABLE NO. PARTICULARS PAGE NO.
Descriptive Statistics of CER rate and the

4.1 41
three macroeconomic variables viz. Brent
crude oil (bbl), natural gas and exchange rate
of rupee (₹) against dollar ($)
CER rates and Natural Gas

4.2 47
CER rates and Brent Crude Oil
4.3 48
CER rates and Currency Exchange rate
4.4 49
The correlation coefficients between
4.5 50
CER rates and the three key variables
under consideration.
CER rates and Natural Gas

4.6 51
CER rates and Bren Crude Oil

4.7 52
CER rates and Currency Exchange rate
4.8 53
4.9 Showing the findings of the report 56

LIST OF FIGURES
T
FIGURE NO. PARTICULARS PAGE NO.
Trend Analysis of CER Spot Prices and CER

4.1 Future Prices
47
Trend Analysis of CER rates and Brent Crude

4.2 Oil
48
Trend analysis of Carbon Credit rate and

4.3 Currency Exchange rate
49
Trend Analysis of CER rates and Natural Gas

4.4 51
Trend Analysis of CER rates and Brent
4.5 Crude Oil
52
Trend Analysis of CER rates and Currency

4.6 Exchange rates
53
CHAPTER 1: INTRODUCTION
CHP 1 – INTRODUCTION
Human combustion of fossil fuels In particular for the power, cement, steel, textile,
and fertiliser industries, is the main source of carbon dioxide emissions, one of the
greenhouse gases (GHG) that allows radiative forcing and contributes to global
warming. The primary GHG, Carbon dioxide, methane, nitrous oxide, hydro
fluorocarbons (HFCs), and other gases are released by these businesses and all
increase the atmosphere's capacity to trap infrared energy, which has an impact on the
climate. As a result of several industrial processes, certain GHG, such as hydro
fluorocarbons, methane, and nitrous oxide are emitted. These GHG have a negative
impact on the ozone layer, which contributes to global warming. The economy is
heavily reliant on carbon emissions from energy production and industrial operations.
National and international emissions trading schemes have been created to reduce
global warming, and carbon credits are a crucial part of these programmes. Growing
concern among nations to reduce carbon emissions led to the development of the idea
1
of carbon credits. While preserving the expansion of their economic activity, pollution
levels. The Kyoto Protocol, an international agreement involving more than 170
countries, formalised the process, and the ensuing Marrakesh Accords agreed on the
market mechanisms. A modification to the United Nations Framework Convention on
Climate Change is the Kyoto Protocol (UNFCCC). Governments that have joined this
protocol have vowed to either reduce emissions of six GHGs, including carbon
dioxide, or participate in emission trading if their emissions of these gases remain the
same or rise.
The idea of carbon credits has been developed to quantify the GHG emissions of any
good, person, event, or place, and the idea of the Kyoto Protocol has been formed to
battle these GHG on an international scale. In the world, 72% of Household
consumption (which includes emissions from cooking, heating, personal
transportation, electricity generation, etc.), government consumption (which includes
emissions from defence research and power consumption), and investments (which
includes infrastructure development, building construction, machine installation, and
other capital goods, etc.) are all related to greenhouse gas emissions, in that order
(Hertwich and Peters 2009). 20% of GHG emissions come from food, 19% from
operating and maintaining homes, and 17% from transportation. In developing
nations, services and food are more crucial than mobility and manufactured goods.
The United Nations Framework Convention on Climate Change (UNFCCC) was

adopted as the framework for a worldwide response to the issue of climate change in
1992 in order to protect the environment from GHG. The Convention has 192 Parties,
almost all of which are members. Stabilization is the Convention's primary goal ,
quantities of greenhouse gases in the atmosphere that will shield the climate system
from harmful human meddling.
Carbon credits are a key component of national and international emissions trading
schemes that have been implemented to mitigate global warming. By capping total
annual emissions and allowing the market to trade any deficiency in emissions, they
offer a motivation to reduce GHG impact emissions on an industrial scale. Credits are
transferable between businesses are purchased and sold on global marketplaces at the
2
going rate. Credits can be used to finance carbon reduction initiatives among
international trading partners. Numerous businesses also engage in the voluntary sale
of carbon credits to businesses and individuals that want to reduce their carbon
impact.
These carbon offsetters buy the credits from a carbon development firm or investment
fund that has compiled the credit information from several projects. The validation
procedure and level of sophistication used by the fund or development business that
served as the project's sponsor have an impact on the credits' validity. Their price
reflects this; voluntary units often have lower value than the units sold through the
CDM, which have undergone extensive validation. The higher value is a symptom of
greater demand for these credits globally as well as increased involvement and fierce
competition. Nonetheless, the question remains: What aspects control the cost of
carbon permits?
WHAT IS CARBON TRADING?
Carbon trading is the buying and selling of a new, artificially-created

commodity – the right to emit carbon dioxide. The right to emit carbon dioxide is a
new, artificially produced commodity that is traded in carbon trading. the trading of
crude oil and other commodities and carbon trading is not a voluntary transaction
between producers and people who wish to consume or resell the products, like
trading in bananas. Instead, it is the product of governments taking action to create
this new commodity—the right to emit carbon—and then restricting its supply to
foster scarcity and, consequently, a market.
Governments have devised and embraced a number of various strategies for reducing
the amount of carbon dioxide that is released into the atmosphere, and carbon trading
is one of them. Carbon emission into the atmosphere, gradually lowering this quantity.
3
It is based on the broader strategy known as "cap and trade," which is meant to restrict
the emission of pollutants.
In comparison to a separate set of tools available to governments to affect behaviour,

those that fall within the purview of direct regulation or standard setting, cap and trade
is frequently described as a market-based technique. Yet, sometimes it is useless to
compare market-based versus non-market-based approaches in this way. It disregards
the reality that market mechanisms don't work alone. They always happen instead.
For the purposes of this paper, the difference between direct and indirect mechanisms
would be more relevant. Given that it is an indirect tool, carbon trading. By changing
the cost of emissions, it is intended to achieve its goal of reducing emissions
indirectly. This in turn alters the behaviour of "actors" in the market, or those in
charge of producing the emissions, by providing an incentive for them to do so and
changing their behaviour as a result. Instead of relying on intermediary mechanisms
like prices, government regulation and standard setting are direct interventions to
affect behaviour. Taxation is an indirect method of changing behaviour since it
modifies the cost of a good, service, or activity.
4
SOURCES OF CARBON EMISSIONS IN INDIA
India is the world’s third largest emitter of greenhouse gases (GHGs), after China
and the US. Coal power plants, rice paddies and cattle are major sources of
emissions, which continue to rise steeply, although per-capita emissions remain
well below the global average.
India is also very vulnerable to climate change, notably due to the melting of the
Himalayan glaciers and changes to the monsoon. The country has pledged a 33-
35% reduction in the “emissions intensity” of its economy by 2030, compared to
2005 levels.
Politics Oil and Gas
Paris Pledge Agriculture and Forest
Coal Impacts and Adaptation
Low Carbon Energy Climate Finance
Energy Efficiency Transport
5
1. POLITICS
India has the world’s second largest population, at 1.3 billion. Its economy
ranks sixth globally in terms of gross domestic product (GDP), just after the UK, and
is the world’s fastest growing major economy. India’s population is expected to
become the world’s largest by 2025, overtaking China and peaking at 1.7 billion in
2060.
India’s constitution, adopted in 1949, says the state shall “endeavour to protect and
improve the environment” and “safeguard [India’s] forests and wildlife”. Its
2006 National Environment Policy aimed to integrate environmental protection into
the development process. Around 13% of India’s population does not yet have access
to electricity, while more than half still relies on traditional biomass (dung, wood, etc)
for cooking. Modi has repeatedly promised to ensure all Indian homes are connected
with electricity, most recently for the end of March 2019, although the quality of
power access remains poor for many.
2. PARIS PLEDGE
The pledge is for a 33-35% reduction in emissions associated with each unit of
economic output (“emissions intensity”) by 2030, compared to 2005 levels.
Carbon Brief analysis at the time found India’s emissions could increase 90%
between 2014 and 2030, even if the pledge is met.
India also aims for 40% of its installed electricity capacity to be renewable or
nuclear by 2030. The pledge says India’s goals represent the “utmost ambitious
action in the current state of development” and criticises the “tepid and
inadequate” response of developed countries to global warming.
6
3. COAL
India is the world’s second largest coal consumer after China, having overtaken
the US in 2015.Moreover, Chinese coal use has plateaued, meaning India could
largely determine the global trajectory for the fuel. Many analysts expect rapid
growth in India to drive increases in global demand over the next few years –
though this is expected to remain below a peak in 2014.
The government currently projects there will be 238GW of coal capacity in 2027.
An earlier draft NEP had no plans for coal expansion before 2022, bar the 50GW
already being built. However, the final version included more than 90GW of
planned coal-fired capacity, which some argue now risks becoming “strandard
assets”.
India is the second

largest coal producer and
importer, after China. Coal
India, the national coal
mining company
and largest coal producer in
the world, accounts
for around 84% of domestic
output. India has proven coal
reserves of around 98bn
tonnes, or 9.5% of the world
total, again second only to China.
4. LOW-CARBON ENERGY
India is notable for its rapid expansion of renewables in recent years. In 2017,
renewable investment and new capacity topped fossil fuels for first time.
However, only 15.5% of India’s electricity came from renewables in 2017,
7
including 9.1% from large
hydro. India also has one of the
world’s largest reserves of
thorium – seen as a safer
alternative to existing nuclear
fuels – and has a long-term
interest in experimental thorium
reactors. However, substantial
generation is unlikely until at
least the 2050s, if at all.
5. ENERGY EFFICIENCY
India has long prided itself on its energy efficiency and emissions
intensity achievements. Its 2001 Energy Conservation Act established
the Bureau of Energy Efficiency, which was tasked with reducing the energy
intensity of the economy.
India also has a national smart grid mission, a rating system to evaluate the
energy performance of buildings and another for small industries to support
more environmentally friendly manufacturing. The government aims to replace
India’s 14m conventional street lights with LEDs by 2019. It is
also subsidising the rollout of LEDs in homes, with 312m distributed so far.
6. TRANSPORT
India currently has the world’s fifth largest car sales. These are expected
to grow with rising incomes and rapid urbanisation, with strong implications for
global oil demand. The government promotes the uptake of electric vehicles
(EVs), although so far India has only 260,000 – including two-wheelers and
8
hybrids – and, overall, only 0.6% of sales are EVs. The rollout of charging
stations remains low.
India plans to increase the share of railways in total land transport from 36% to
45%, its climate pledge says, including through development of dedicated freight
corridors. Aviation only represented 1% of India’s emissions in 2014, well below
the world average, but its rapid expansion means this has already likely increased.
India has the world’s fastest growing domestic aviation market, with a 19% rise
seen last year alone. It aims to construct around 100 new airports in the next 10-15
years and is set to become the world’s third largest market by 2020. Passenger
numbers for domestic and international flights have already doubled since 2010
and could triple to 520 million by 2037.
7. OIL AND GAS
India relies on large amounts of oil, which made up 29% of total energy
consumption in 2017. Its oil demand is rising fast and could more than double by
2040.This means it could soon overtake China as the top driver of global oil
demand growth. However, its own oil production is falling.
The government has provided large consumption subsidies to both oil and gas.
Between 2014 and 2016, subsidies fell by almost 75% to $6.8bn, due
to reforms and falling oil prices. Further reforms are ongoing. Gas has never
played a prominent role in India’s energy mix, making up only 6% of energy
consumption in 2017. India currently imports around half its gas, largely
from Qatar, the US, Australia and Russia.
However, gas consumption is rising in India, although its higher price means
it struggles to compete with coal and fuel oil. The government aims to more than
double the share of gas in the energy mix to 15% by 2022, citing the
environmental benefits of adopting it as a “cleaner fuel”.
9
8. AGRICULTURE AND FORESTS
Agriculture is responsible for around 16% of India’s GHG emissions. Of this, 74%
is due to methane produced from livestock – largely cows and buffalo –
and ricecultivation. The remaining 26% comes from nitrous oxide emitted
from fertilisers.
Irrigation using highly

inefficient water
pumps accounts
for around 70% of the
energy consumption of
agriculture. India
has installed 200,000
solar water pumps –
about 1% of the
country’s total 21m,
with another 2.5m planned.
India’s forest cover has increased in recent years, its climate pledge says,
becoming a net CO2 sink. A recent study found India accounted for 7% of the
global net increase in leaf area from 2000-2017. Its long-term goal is to bring 33%
of its area under forest cover – some 109m hectares – up from 24% in 2013 (79m
hectares).
9. IMPACTS AND ADAPTATION
India dedicates a large part of its 2015 climate pledge to outlining current and
expected adverse impacts on the country. India is also vulnerable to increases in
vector-borne diseases, such as malaria and dengue, which
could both see increases due to climate change. It says:
10
“Few countries in the world are as vulnerable to the effects of climate
change as India is with its vast population that is dependent on the growth of
its agrarian economy, its expansive coastal areas and the Himalayan region
and islands.”
India could see significant sea level rise, affecting the river water systems that
hundreds of millions rely on for food. Its 1,238 islands are also at risk. This made
no explicit mention of climate change, but aimed to move from a “response and
relief” approach to “prevention-mitigation and preparedness”. In 2016, India
launched a disaster management plan, which integrates the principles of the Paris
Agreement alongside other global disaster risk reduction frameworks.
10. CLIMATE FINANCE
India has long put a key emphasis on the need for climate finance and technology
transfer from developed to developing countries. India received by far the highest
level of single-country funding ($725m) approved by multilateral climate funds in
absolute terms from 2013 to 2016, according to Carbon Brief analysisIts climate
pledge notes:
“[O]ur efforts to avoid emissions during our development process are also
tied to the availability and level of international financing and technology
transfer since India still faces complex developmental challenges.”
. India also has several domestic climate finance initiatives. As well as money
spent through its eight national missions, its coal cess has so far collected $12bn,
with proceeds used to finance clean energy, albeit not
exclusively. Several adaptation programmes have also been allocated government
funding.
11
12
ACTIVITIS UNDERTAKEN FOR CARBON CREDIT
Activities finalised to be considered for trading of carbon credits under Article

6.2 mechanism to facilitate transfer of emerging technologies and mobilise
international finance in India.
India has notified the National Designated Authority for the Implementation of the
Paris Agreement (NDAIAPA) vide Gazetted Notification dated 30.05.2022 The
Authority is mandated inter-alia to take decisions in regard to the type of projects that
may take part in international carbon market under Article 6 mechanisms.
This is in the backdrop of the Paris Agreement Rulebook being finalized in respect of
Article 6 which focuses on carbon trading through bilateral/cooperative approaches
and international market mechanisms. India has taken steps mandated on the Host
Party/Country.
Following list of activities has been finalized to be considered for trading of carbon
credits under bilateral/ cooperative approaches under Article 6.2 mechanism.
I. GHG MITIGATION ACTIVITIES:
Renewable energy with storage (only stored component)

Solar thermal power
Off- shore wind
Green Hydrogen
Compressed bio-gas
Emerging mobility solutions like fuel cells
High end technology for energy efficiency
Sustainable Aviation Fuel
Best available technologies for process improvement in hard to abate
sectors
13
Tidal energy, Ocean Thermal Energy, Ocean Salt Gradient Energy,
Ocean Wave Energy and Ocean Current Energy
High Voltage Direct Current Transmission in conjunction with the
renewal energy projects
II. ALTERNATE MATERIAL
Green Ammonia
III. REMOVAL ACTIVITIES:
Carbon Capture Utilization and Storage
These activities will facilitate adoption/transfer of emerging technologies and may be

used to mobilise international finance in India. The activities will initially be for first
03 years and may be updated/revised by NADAIPA.
 CARBON CREDITS CAN BE GROUPED INTO THREE

LARGE CATEGORIES:
Avoidance projects (they avoid emitting greenhouse gasses

altogether)
Reduction (they reduce the volume of greenhouse gasses
emitted into the atmosphere)
Removal (they remove greenhouse gasses directly from the
atmosphere)
14
HOW DO CARBON EMISSIONS AFFECT
THE ENVIORNMENT?
Climate change is altering our planet, causing extreme weather events like tropical
storms, wildfires, severe droughts and heat waves, negatively affecting crop
production, causing disruption to animals’ natural habitats, and more. Because the
emission of greenhouse gases is the main perpetrator that causes global
warming (and therefore climate change), it’s important to understand how carbon
and other greenhouse gas emissions affect the environment. After all, if we don’t
understand the impact of carbon emissions, then how can we change what we’re
doing and save the planet ?ecific Exercises
Agriculture is a significant source of emissions in our atmosphere.
ARE CARBON EMISSIONS POLLUTION ?
As children — though it depends which decade you grew up in — we often heard

more about “pollution,” than we did “carbon emissions” or “greenhouse gases.” But
essentially, yes, carbon emissions are a form of pollution.
According to National Geographic, carbon dioxide is considered a pollutant, though

we may more readily associate “pollution” with things like smoke or plastic floating
in a lake. But pollutants are anything that falls under the umbrella of a mix of particles
15
and gases that have the capacity to reach harmful concentrations, according
to National Geographic. Things like soot, smoke, mold, and pollen are considered
pollutants, but greenhouse gases like methane and carbon dioxide are, too.
HOW DO CARBON EMISSIONS AFFECT THE

PLANET ?
Carbon emissions affect the planet significantly, as they are the greenhouse gas with
the highest levels of emissions in the atmosphere. This, of course, causes global
warming and ultimately, climate change.
Carbon dioxide is released into the atmosphere when fossil fuels — coal, natural gas,
and oil — are burned. But burning other biological materials also releases carbon
dioxide: solid waste, trees, etc. Anytime that carbon dioxide is emitted into the
atmosphere in large quantities — especially if it’s staying in the atmosphere for
thousands of years — it is affecting the planet.
16
How do carbon emissions affect the planet? For starters, NASA says that rising levels
of carbon dioxide in the atmosphere will both hurt and help crops. While increased
carbon dioxide levels can “increase water-use efficiency in crops” and also “mitigate
yield losses due to climate change,” these levels can also create imbalances in nitrogen
and carbon, minimizing crops’ necessary nutrients like iron, zinc, and protein.
Perhaps the most important way that carbon emissions affect the planet is by causing
climate change. As the average global temperature warms, our climate inherently
changes — it warms. This warming causes extreme weather events like tropical
storms, wildfires, severe droughts and heat waves. And while an increase in carbon in
the air can, in some ways, positively affect plants and crops, if the climate changes the
lands and causes drought or other weather events that crops and plants are unable to
survive in, it can be detrimental to crop yields. The same problem holds for animals,
as well; as climate change alters our environment and natural habitats, different
indigenous species take a hit. Some species may disappear altogether, while others
might thrive and overtake others.
Carbon emissions directly affect humans, too, causing more respiratory disease from
an increase of smog and air pollution. Not to mention that if carbon emissions
eradicate certain animal species, destroy crop yields and lands, humans will also see
the repercussions of those effects as well.
WHERE DO MOST CARBON EMISSIONS COME

FROM?
Greenhouse gas emissions come from six main categories. However, the bulk of
carbon emissions comes from the biggest category of all: transportation.
Transportation accounted for 28.9 percent of all greenhouse gas emissions in 2017 in
the U.S. and constitutes everything from burning fossil fuels for cars, trucks, ships,
trains, and even airplanes.
17
In the U.S., most carbon emissions come from burning fossil fuels for energy
production, not just for transportation, according to the U.S. Energy Information
Administration. In fact, half of carbon dioxide emissions in 2018 came from burning
petroleum fuels. Petroleum fuels are used for electricity and industry use, but
transportation actually emits more carbon dioxide because it solely relies on
petroleum.
ARE CARBON EMISSIONS INCREASING OR

DECREASING?
According to NPR, carbon emissions are still increasing around the world. The data
comes from a United Nations report that states global fossil fuel carbon dioxide
emissions from electricity generation and industry grew by 2 percent in 2018.
The releasing of greenhouse gases has steadily increased over the past decade and the
average global temperature has also steadily increased as a result. In fact, the Earth is
1 degree warmer than it was before the age of industrialization. While 1 degree might
not seem significant, it is; the 2018 National Climate Assessment warned that if
global emissions do not start to decrease, and decrease rapidly, it could mean
18
economic and environmental crisis. Of course, this has prompted some politicians to
focus on switching to renewable energy and generating the Green New Deal.
ARE CARBON EMISSIONS DANGEROUS?
Carbon emissions are dangerous in that they threaten the livelihood of our planet,
animals, humans, and ultimately, life as we know it. The amount of carbon emissions
trapped in our atmosphere causes global warming, which causes climate change,
symptoms of which include melting of the polar ice caps, the rising of sea levels, the
disturbance of animals’ natural habitats, extreme weather events, and so many more
negative side effects that are dangerous to the planet, to human and animal life, and to
our future.
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CARBON CREDIT PRICING CHART: UPDATED
2023
There are many ways to value a carbon credit, whether using market dynamics, basing
it on the cost of implementation, or the value that the project delivers. Pricing can also
vary by project type, size, location, and other determining factors.
The chart above shares a basic snapshot of the pricing of various types of credits
within the marketplace.
20
The World Bank, who compiles a yearly report on carbon credit pricing in the carbon
marketplace, also noted the following:
Higher prices are required to achieve global emission targets.

Important to note, however, is that due to the current pandemic, some
jurisdictions delayed reporting on price increases. The figures may change once
all nations send in their data.
Most prices of carbon credits are below the $40-80 per metric ton of carbon
dioxide emitted needed to keep global warming within a 2-point degree, as
provided by the Paris agreement.
To make sense of the figures, we need to understand how the prices of carbon credits
are determined. In the following sections, you will learn the process of determining
the prices of carbon credits. Keep reading to find out how you can ensure you pay
the correct prices for your credits…
HOW PRICES OF CARBON CREDITS ARE DETERMINED?
There are two main ways of determining the prices of carbon credits, namely:
Internal pricing
External pricing
The first option works for organizations that set internal carbon credits prices to guide
their investment decisions.3 Such carbon offset companies have their internal
mechanisms of determining carbon credits prices based on various factors, which will
be discussed later.
On the other hand, external pricing is fixed primarily by the market forces of supply
and demand.2 Additional factors that influence external pricing include existing
regulations and international climate change protocols.
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 INTERNAL PRICING OF CARBON CREDITS
As noted earlier, companies who want to use their predetermined internal prices to
guide their investment decisions use this option. The organizations can either use
shadow prices or internal carbon fee rates to fix the prices of credits.
The first option, using shadow prices, will have organizations compute their emission
activities’ prices and use them as the basis for making investment decisions.
While setting the prices is complex, it is the only viable way for large organizations
with substantial financial commitments to protect their investment. A good example is
the World Bank, which has set up shadow carbon prices that it uses when making
investments in the carbon trading marketplace.
The second option, internal carbon fee rates, entails charging organizational units a fee
that accounts for their emission activities.2
The sums collected from applying the fees are used to determine the base prices for
procuring credits in the market. This option is much simpler than the first, as it entails
applying a constant rate instead of engaging in complex calculations… but is less
accurate.
 EXTERNAL CARBON CREDIT PRICING
This approach to determining the prices of carbon credits is controlled by the market
forces and the overall regulatory environment. Typically, pursuers of this option have
three alternatives to consider:
Emission Trading Schemes

Crediting mechanisms
Carbon tax
The first alternative, Emission Trading Schemes, is the most widely adopted.
Also termed a cap and trade system, the choice entails first having governments
set the maximum emissions limit for an industry.
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Next, carbon credits are issued to the market based on the preset limit, giving
companies the right to emit but within prescribed limits. The finance from such credits
goes directly into emission reduction activities.
The second alternative, Crediting Mechanisms, is slightly different from the first. It
entails determining emissions from a set of activities, then assigning the activities
credits to ensure the availability of finance to offset the emissions.2
These credits are sold and traded in the carbon marketplace. Organizations keen on
offsetting emissions can then look for projects related to their firms and purchase the
credits.
The last option, carbon tax, entails setting a base price for greenhouse gas emission
reduction activities. Companies releasing emissions can then buy credits at the rates
set per unit of carbon dioxide emitted into the atmosphere. This option is preferred
because the prices charged are stable and fixed.2 Unfortunately, it isn’t easy to verify
the reality of emission reduction activities with this option.
23
SOME CARBON CREDIT TRADING LISTED
COMPANIES IN INDIA
FOLLOWING ARE LIST OF CARBON CREDIT TRADING

COMPANIES IN INDIA –
S.N. COMPANY DETAILS
1) Jindlal Vijaynagar Steel $225 Million worth
Powerguda in Andhra
2) Pradesh Saved 147 tonnes of carbon
Handi Forest in Madhya

3) Pradesh Restored 10,000 hectares of degraded forest
Estimated to received 199.9 crore from

4) Torrent Power AEC energy efficient projects
Estimated to received 42.9 crore from Gas

5) Indian Aluminium capture Projects
Kalpataru Power 5.3 crore estimated to received by energy

6) Transmission efficient projects.
Estimated to received 4.1 crore from energy

7) Grasim Industry efficient projects
Estimated to receive 15.7 crore from

8) Balrampur Chini renewable projects.
24
IMPORTANT FACTORS RESPONSIBLE FOR THE
DEVELOPMENT OF CARBON TRADING
SUSTAINABILITY AND GROWTH - THE CONFLICT AND

THE BALANCE
Economic progress is raising our living standards and making our lives more
comfortable. On the other hand, this very advancement could perhaps lead to
environmental degradation. Any rise in national income would only result from
increased production of goods and services requiring increased consumption of
resources such as land, forests, fuels, etc., the availability of which is essentially
limited. Although some of these resources may be permanent, others become depleted
and ultimately exhausted with constant use.In fact, the conflict between economic
development and conservation is a conflict between short-term and long-termgoals,
between current and future generations ' interests. Large natural resource exploitation
today, while increasing economic growth for the present generations, will lead to the
steady decline and deterioration of these resources, thereby reducing their availability
to our future generations and adversely affecting their production, income and living
standards. Environmental degradation affects not only us, but also affects our future
generations.
GLOBAL COOPERATION AND EFFORTS
Sustainability of the ecosystem has a regional aspect. Considering that greenhouse gas
(GHG) emissions accelerate the global warming process in any country, this is clearly
an environment where a global cooperation solution is required. Unless it is part of a
global compact, no country will have enough opportunities to curb its own emissions.
Such a compact, in effect, can only be done if the burden is fairly distributed.
25
Developing countries have consistently argued that since it is the industrialized
countries that have contributed the bulk of GHG's accumulated stock historically and
are also the most capable of paying; they must bear the burden of global mitigation
and adjustment.A comparison of carbon dioxide (in short, coal) emissions across the
G20 countries shows that Australia, the United States and Canada were the top three
carbon emitters in 2010, with carbon emissions in metric tons of 18.8, 18.1 and 16.3
per capita respectively. In terms of carbon emissions, Brazil, Indonesia and India sit at
the edge of the G20, with per capita contributions of 2.3, 1.6 and 1.4 metric tons
respectively in 2010, well below the developed countries. According to the 2012-13
Economic Survey, India's per capita carbon emissions in 2031 will be about 4 tons,
which will still be 4.22 tons lower than the global per capita emissions in 2005 and
about 75% lower than the top three emitters ' 2010 levels.
REDUCING GLOBAL WASTAGE
An integral part of profitable business model is to reduce waste and reduce running
costs and increase profitability in the process. According to reports, between 30 and
50% (around 1.2-2 billion) tonnes of food produced worldwide never reaches a human
stomach. Although waste in sub-Saharan Africa and South-East Asian countries, like
India, tends to occur mainly at the farmer-producer end of the supply chain due to
inefficient processing, insufficient local transport and weak storage facilities,
production is often wasted by retail and consumer behavior in developed countries
such as the United Kingdom. Surveys also show that in India At least 40% of all fruits
and vegetables are lost to farmers and customers due to lack of refrigerated transport,
bad roads and weather conditions. Wasting food means losing not only nutrition that
supports life, but also valuable resources, including land, water and energy. In
growing crops that never meet the market, about 550 bn cubic meters of water are
wasted globally. Within India, water output in agriculture, which absorbs about 80%
of our water resources, is only about 38%, compared poorly with 45% in Malaysia and
Morocco and 50% to 60% in Israel, Japan, China and Taiwan.
26
CHAPTER 2- LITERATURE
REVIEW
27
LITERATURE REVIEW
The literature on environmental economics is very wide and rich. I give a quick
overview of this literature in this chapter, focusing on the parts that are most pertinent
to my own research.The structure of this survey is as follows. I start off by giving a
brief overview of the literature that recognised and examined the key economic
problems related to environmental economics. I turn to an in the part after that
discussion of how market structure and environment interact.
Here, I'll take into account both companies that focus just on production and those
that conduct both production and environmental R&D.
1.
(Gorain, Ayushman, & Subhajit , 2021)

A study on “ An Analysis of Carbon Market and Carbon Credits in India” conducted
by Subrata Gorain, Ayushman Malakar and Subhajit Chanda. The study is conducted
regarding the Global climate change that is becoming an alarming problem of the 21st
century, with global warming as the biggest challenge. Anthropogenic activities which
have added significant quantities of greenhouse gases (GHGs) to the atmosphere ever
since the Industrial Revolution. In this study, they have assessed the overview of
world’s carbon market and analysed how much carbon credit India may have traded in
the world carbon market, if emission from the crop residue burning was stopped in the
Indian agricultural sector. Further we have fitted an econometric model to determine
the effect of carbon trading on other stock market variable.
2.
(Paul, 2010)
This paper modestly tries to explore an overview of carbon credit and carbon trading
in India. After the advent on Kyoto Protocol on February 16th , 2005 that has
instigated a worldwide awareness to reduce Green House Gas (GHG) emissions. Since
then, almost all the industrially developed and developing countries allover the world
have initiated considering this issue seriously. Accordingly, the concept of carbon
credit and carbon trading have evolved from their efforts and been accepted
28
worldwide as a sustainable solution to the problem concerned within a very
shortduration since its evolution. Therefore, this research aims at sketching the present
scenario of carbon credit and carbon trading in India and and identifying the future
prospects of the same in the nation.
3.
(Thuy , Phat, & Nhan, August, 2022)
The scope and difficulties of carbon trading in India are the focus of this study. They
selected this subject because they believed that greenhouse gas mitigation, the primary
cause of global warming, could be accomplished through the use of carbon trading,
which is a current hot button issue. They intended to learn more about emissions
trading and how it functions globally through this research. The next step was to
evaluate the scope and difficulties of establishing such a system in India. They
discovered that the European Union is where carbon trading excels as a strategy for
reducing greenhouse gas emissions. They later learned the requirements for
establishing and sustaining such a platform, as well as the procedures and actions
required to start a carbon - trading platform in India.
4.
(Bhowmik, Jan-Feb 2017)
The author of this paper discusses the idea of carbon trading, its global market, global
trading mechanism, international organisation, EUETS, and relationship between
REDD and the carbon market in regard to the Paris Convention commitments. The 10
REDD+ and carbon market fallacies are more elements that future study can explore.
The article emphasised India's roadmap for the potential of the carbon market in 2020.
5.
(Amit & Anjali, 2018)
The deployment of climate mitigation technology must be accelerated if attempts are

to be made to slow global warming, especially in developing nations where the impact
of climate change on the environment, economic growth, market management,
29
revenue management, and stakeholder participation is low. Some intergovernmental
organisations have created innovative climate change programmes. In consideration of
the objectives and guiding principles of UNFCCC, this article focuses on the structure
and regulation of Sustainable Low Carbon Markets (SLC), as stated by governments
in their National Sustainable Development Goals (SDG), and how this facilitates or
hinders the adoption of priority low-carbon technologies into these markets. The role
of the Indian commodity market, conventional energy, and renewable energy in
addressing issues of jurisdiction and market participation will continue to be very
promising.
6.
(Nishtha & Vaibhav, February 2023)
In light of this, CEEW held a meeting with industry stakeholders to ascertain their
worries and viewpoints. The two main typologies of carbon markets—project-
based/offset and Emission Trading Scheme (ETS) based—are dissected in this issue
brief, along with the important characteristics that define their environmental integrity
and functional limits. The policy environment in India is also described in light of
recent steps taken in the direction of the creation of an Indian Carbon Market and
market-based instruments. The brief concludes with its recommendation after
discussing the main issues that major Indian stakeholders have with the establishment
of the Indian carbon market.
7.
(Bhutani, 2017)
In this work, we outlined the macroeconomic factors that affect the price of carbon
emission reduction permits and developed an empirical relationship between the spot
and future markets for CERs in India from March 31, 2008, to November 11, 2011.
within the Kyoto member countries of the Protocol have three choices for lowering
the target carbon emissions: 1. Trading of emissions internationally 2. Clean
Development Mechanism (CDM) 3. Cooperative implementation. The institutional
30
and regulatory framework of carbon trading in India was explored in the current study.
It was determined that the administrative operation and market monitoring have
significant flaws. The empirical results demonstrate a high correlation between CER
Spot and future prices, as well as between CER Spot prices and Natural gas prices.
Yet, neither the price of crude oil nor the currency rate greatly affects the CER Spot
prices. Finally, engaging in the international trade of these credits still presents the
nation with tremendous prospects. In other words, it would result in killing two birds
of with one stone.
8.
(Chute, 2021)
The problem of market failure is the main focus of older environmental policy
research. In recent decades, interest in environmental economics, particularly the role
of government policy in preventing environmental degradation, has exploded due to
the rising recognition that environmental degradation has major socio-economic
ramifications for both the present and future generations. In the past, environmental
economists have concentrated on factors that contribute to market failure, such as
externalities, non-exclusion, nonrival consumption, and incomplete markets. But in
recent years, the significance of an oligopolistic market structure in producing market
flaws has gradually come to light. My own work is directly related to this body of
literature. In my research, I look at connections between environmental policy, market
organisation and inefficiency.
9.
(Shah, September, 2016)
The current analysis focuses on organisations in the energy sector that had large-scale
CDM Projects registered and running in Gujarat as of 2012. Phase I of the Kyoto
Protocol. In the study, variables influencing CDM projects, considerations for
registration, and challenges encountered by organisation, project risk, organisation
31
impact, carbon financing and trading, and corporate social responsibility. Several
ideas relating to CDM Projects were provided in the study. The study makes a
contribution to the society by focusing on a current issue that aids in a better
comprehension of the concept and helps the society choose a new approach to slow
down global warming.
10.
(Zhanga, 2011)
This paper reviews the researches related to international carbon emission right
trading. Based on the analysis of marginal abatement curves theory, it has been
demonstrated that the fact that different countries or districts have different marginal
abatement costs of carbon emission upon respective abatement promise gives rise to
international carbon emission right trading. Furthermore, this paper proposes that
developing countries should actively participate in the international carbon emission
right trading in order to obtain due market benefits. Then, on the basis of the two-
phase model, this essay also discusses the optimal exports scale of carbon emission
right and its determinant factors, and evaluates the optimal export quantity of carbon
emission right for China at the first phase.
32
CHAPTER 3- RESEARCH
METHODOLOGY
33
3.1 PROBLEM IDENTIFICATION
3.1.1 PROBLEM IDENTIFICATION
Carbon emissions are dangerous in that they threaten the livelihood of our planet,
animals, humans, and ultimately, life as we know it. The amount of carbon emissions
trapped in our atmosphere contributes to global warming, which in turn causes climate
change, which has a number of harmful effects on the environment, human and animal
life, and our future, including melting of the polar ice caps, rising sea levels,
disruption of animal habitats, and extreme weather events.
3.1.2 PROBLEM STATEMENT
The current examination aims to put on some information to solve the identified
problem regarding the carbon emissions in the environment. The study has been
undertaken by identifying the sources of carbon emissions, its impact on the
environment. And how the carbon credit is generated, and how it its traded in the
India. The study is titled as “ CARBON EMISSIONS TRADING IN INDIA”.
3.2. RESEARCH OBJECTIVES
Identifying the sources of carbon emissions and its impact on the environment.
To represent the empirical relationship between CER (Carbon Emission
Reduction) rates and Brent Crude oil.
Reduction) rates and Natural Gas.
Reduction) rates and Currency exchange rate of India against USA.
34
3.3 RESEARCH DESIGN
 EXPLORATORY RESEARCH-
Exploratory research is defined as a research used to investigate a problem which is not

clearly defined. It is conducted to have a better understanding of the existing problem, but
will not provide conclusive results. For such a research, a researcher starts with a general idea
and uses this research as a medium to identify issues, that can be the focus for future
research.
For this study, the researcher has undertaken Exploratory Research, to know the
problem and define it clearly and have better understanding of the existing problem.
 DESCRIPTIVE RESEARCH –
This research aims to accurately and systematically describe a population, situation or

phenomenon. It can answer what, where, when and how questions, but not why
questions. A descriptive research design can use a wide variety of research methods to
investigate one or more variables. Unlike in experimental research, the researcher
does not control or manipulate any of variables, but only observes and measures them
 CASUAL RESEARCH –
Casual research can be defined as a research method that is used to determine the
cause and effect relationship between two variables. This research is used mainly to
identify the cause and effect relationship between two variables. This research is used
mainly to identify the cause of the given behaviour. Using casual research, we decide
what variations take place in an independent variable with the change in the dependent
variable.
35
3.4. DATA COLLECTION
3.4.1 PRIMARY DATA
Primary data is a type of data that is collected by a researcher directly from the the
main sources through interviews, surveys, experiments, etc. Primary data are usually
collected from the source- where the data originally originates from and are regarded
as the best kind of data in research.
3.4.2 SECONDARY DATA
Secondary data is the data that has already been collected through primary sources and
made readily available for researchers to use for their own research. Various research
papers are studied in order to clear the concept of carbon emissions trading, that
helped to clear the concepts in more better way. It is a type of data that has already
been collected in the past.
The data for the study is collected from the several secondary sources. The
exchange rate between Indian currency and the US dollars is collected from the
Reserve bank of India’s (RBI) official website.
The energy prices and Carbon Emission Reduction rates are collected from
Investing.com.
Multi Commodity Exchange of India Ltd (MCX) is a demutualized

exchange with permanent recognition from the government of India. MCX
offers futures trading in 56 commodities including bullion, energy, grains,
plastics, metals, oil and oilseeds, fibers, spices, pulses, sugar, plantations and
carbon credits.
36
3.5. SAMPLING DESIGN
3.5.1 SAMPLE ELEMENT
Among various types of trading here in this study only carbon trading is
undertaken into the study.
3.5.2. SAMPLING SIZE
The period of study considered in this study begins from 1st Jan 2020 till 31st Dec 2022. So the
period of study considered here is Jan 2020 to Dec 2022. All prices are taken on a quarterly basis.
Data od three years is taken intor the study.
3.6. DATA PROCESSING
3.6.1 DATA CODING:
The data in this research paper is coded and processed in MS - Excel. The data is
formatted in a discrete data distribution and further it is processed for Descriptive
Statistics , Trend Analysis and Correlation .
3.6.2 DATA REPRESENTATION
Here, in this research study, the collected data is represented in a systematic way , that can be
easily understood by the reader of the report. The data is presented in the following ways:
1. Tabular Form
2. Bar Graph
3. Line Graph
3.6.3.DATA ANALYSIS
This chapter is bifurcated in three divisions:
1. Descriptive Statistics of the data

2. Trend Analysis of the Data
3. Tests based on Correlation
37
3.7 LIMITATIONS OF THE STUDY
There is a lack of awareness among Indian industry and government officials

about the carbon trading mechanism, making it difficult to engage them in the
carbon trading scheme.
Accurate measurement and verification of emissions reductions is a major
challenge in carbon trading. This requires sophisticated technology and
specialized personnel, which are not easily available in India.
Lack of financial resources and the absence of a vibrant carbon market in India
are major challenges to the development of carbon trading in the country.
India lacks a comprehensive and uniform legal framework for carbon trading.
This leads to difficulties in the implementation of the carbon trading scheme
and the determination of carbon credits.
3.8. STRUCTURE OF THE REPORT
1.
• Introduction to the Topic
• Literature Review
2.
3.
• Research Methodology
4.
• Data Analysis and Interpretation
5.
• Findings, Conclusions and Recommendations
6.
• Bibliography
38
CHAPTER 4:
DATA ANALYSIS AND
INTERPRETATION
39
DATA ANALYSIS AND INTERPRETATION
Here, in this chapter we are going to have a look towards the data analysis and
interpretation of the collected data of Carbon credit rates, Natural gas , Brent Crude
Oil and Currency Exchange rate of INR vs USD.
THIS CHAPTER IS BIFURCATED IN FOUR DIVISIONS:
4. Descriptive Statistics of the data

5. Trend Analysis of the Data
6. Tests based on Correlation
These are interpreted as follows:
1. DESCRIPTIVE STATISTICS OF THE DATA
The information relating to CER The three macroeconomic factors, Brent crude oil
(bbl), natural gas, and the exchange rate of the rupee ( ₹ ) versus the dollar ( $ ), have
been analysed based on the CER prices and the three macroeconomic variables. In
order to obtain a thorough understanding of all the variables, consider the mode,
skewness, kurtosis, etc. The most common value that describes the data is laid out by
the central location tools, such as mean, median, and mode. A resemblance in their
values indicates the presence of non-normality between them.
Once the data has been analysed, it is clear that all of the factors being looked at—the
CER price and the three macroeconomic variables brent crude oil (bbl), natural gas,
and rupee exchange rate ( ₹) against dollar ($)—are consistent with one another. With
the exception of the exchange rate, where the measure indicates the presence of a
small spread, it can be seen from examining the corresponding Standard Deviation
values of the aforementioned variables that there is less degree of dispersion in all of
these.
Descriptive statistics are brief informational coefficients that summarize a given data
set, which can be either a representation of the entire population or a sample of a
population. Descriptive statistics are broken down into measures of central tendency
and measures of variability (spread). Measures of central tendency include the mean,
median, and mode, while measures of variability include standard deviation,
variance, minimum and maximum variables, kurtosis, and skewness.
40
Table 4.1. Descriptive Statistics of CER rate and the three macroeconomic variables
viz. Brent crude oil (bbl), natural gas and exchange rate of rupee (₹) against dollar
($)
CARBON CURRENCY
CREDIT EXCHANGE
NATURAL GAS BRENT OIL RATE
Mean 54.47909091 4.394181818 71.27909 75.80736364
Median 53.69 3.914 75.41 74.915
Minimum 20.39 1.799 26.48 72.877
Maximum 89.24 7.926 107.14 82.77
Standard
Deviation 25.80791795 2.127246757 27.52753 2.839087257
Sample
Variance 666.0486291 4.525178764 757.765 8.060416455
Kurtosis -1.696985778 -1.16153361 -1.24226 3.170230725
Skewness 0.014745969 0.423448401 -0.29768 1.827648343
Range 68.85 6.127 80.66 9.893
Sum 599.27 48.336 784.07 833.881
Count 11 11 11 11
Confidence
Level(95.0%) 17.3379952 1.429103817 18.49325 1.907324772
41
1. MEAN
The mean is the sum of the value of each observation in a dataset divided by the
number of observations. This is also known as the arithmetic average. The mean can
be used for both continuous and discrete numeric data.
The mean of the Carbon credit rate in the following data is 54.47 Rs. The mean of
other macroeconomic variables Brent crude oil, natural gas and currency exchange
rate is 71. 27Rs. 4. 39 Rs.. And 75.81 Rs.respectively.
2. MEDIAN
The median is the middle value in distribution when the values are arranged in
ascending or descending order. The median divides the distribution in half (there are
50% of observations on either side of the median value). In a distribution with an odd
number of observations, the median value is the middle value. The median is less
affected by outliers and skewed data than the mean and is usually the preferred
measure of central tendency when the distribution is not symmetrical.
The median of the Carbon credit rate in the following data is 54.69 Rs. The median of
other macroeconomic variables Brent crude oil, natural gas and currency exchange
rate is 75.41Rs. 3.914 Rs.. and 4.915 Rs.respectively
3. MAXIMUM VALUE
The maximum value represents the highest value in the collected data of a variable.
And here in this data the maximum value of Carbon credit is 89.24. Similarly , the
maximum value of Natural Gas, Brent Crude Oil and Currency Exchange rate is
7.926, 107.14 and 82.77, respectively.
4. MINIMUM VALUE
The minimum value represents the lowest value in the collected data of all the
macroeconomic variables . And here in this data the minimum value of Carbon credit
is 20.39. Similarly , the minimum value of Natural Gas, Brent Crude Oil and Currency
Exchange rate is 1.799, 26.48 and 72.877, respectively.
42
5. RANGE
The range is the difference between the largest and the smallest observation in the
data. The prime advantage of this measure of dispersion is that it is easy to calculate.
On the other hand, it has lot of disadvantages. It is very sensitive to outliers and does
not use all the observations in a data set. It is more informative to provide the
minimum and the maximum values rather than providing the range.
The range of the estimated values in th following data od carbon credit is 68.85. The
range of Natural gas is 6.127 , brent crude oil is 80.66 and that of currency exchange
rate is 9.893.
6. STANDARD DEVIATION
Standard deviation (SD) is the most commonly used measure of dispersion. It is a

measure of spread of data about the mean. SD is the square root of sum of squared
deviation from the mean divided by the number of observations. SD is used as a
measure of dispersion when mean is used as measure of central tendency (ie, for
symmetric numerical data).
The estimated standard deviation of the following are as follows: Carbon Credit-
25.81, Natural Gas- 2.13 , crude oil – 27.53 and Currency Exchange rate – 2.82.
7. SAMPLE VARIANCE
Variance analysis is the comparison of predicted and actual outcomes. The more
frequently a company measures these variances, the more likely it may be to discover
trends in its data. Whether a variance works can depend on the type of variance
analysis you calculate and the predicted variances a company expects. The sum of all
variances gives a picture of the overall over-performance or under-performance for a
particular reporting period.
The calculated variance in the following data is as follows: Carbon credit- 666.04,
Natural Gas – 4.53 , Crude Oil – 757.765 and Currency Exchange Rate- 8.06.
43
8. KURTOSIS
Kurtosis is a measure of whether the data are heavy-tailed or light-tailed relative to a

normal distribution. That is, data sets with high kurtosis tend to have heavy tails, or
outliers. Data sets with low kurtosis tend to have light tails, or lack of outliers. A
uniform distribution would be the extreme case.
The estimated Kurtosis of the following data are as follows: Carbon credit is negative
i.e -1.69, kurtosis of Natural Gas is also negative – 1.16 , kurtosis of Crude Oil is
also negative – 1.24 and and that of Currency Exchange Rate is positive i.e 3.17.
9. SKEWNESS
Skewness is a statistical asymmetry indicator that quantifies how skewed a particular

probability distribution is. By examining Table 2, we can see that all other variables
exhibit positive symmetry with natural gas, whereas crude oil is negatively skewed to
the left, being highly skewed and tilting to the right. On the other hand, kurtosis is a
measurement of how tall or flat a probability distribution is. The table shows that the
prices for CER price, natural gas, and crude oil are all leptokurtic, with crude oil
having the tallest peak among them all, while the prices for exchange rates have a
Platykurtic distribution.
10. SUM
The sum represents the total summation of all the values given in the collected data of
all the individual variables taken into consideration. Here, the sum of Carbon Credit is
599.27 , then the sum of Natural Gas is 48.336 and Crude Oil is 80.66 and That of
Currency Exchange rate is 833.881.
11. PROBABLISTIC APPROACH

In statistics, the confidence level indicates the probability, with which the estimation
of the location of a statistical parameter ( e.g. An Arithmetic mean) in a sample survey
is also true for the population.
If the confidence level was to be estimated at 95%, a caluculatedbstatistical value that

was based on a sample, would also be true for the whole population within the
estimated confidence level- with a 95% chance. In other words: The chances are very
44
high that the arithmetic mean (as a statistical value) of a population is exactly within
the margin of error which were established for the survey based on a sample.
Conversely, there is a chance that for many times repeated surveys with new samples,
in 5 cases out of 100, one would calculate as arithmetic mean which does not fall
within in the confidence interval of the population. The result of the survey would
indeed be correct for the respondents themselves, but not representative for the
surveyed group.
45
TREND ANALYSIS OF THE DATA
Trend analysis is a technique used to examine and predict movements of an item based
on current and historical data. You can use trend analysis to improve your business
using trend data to inform your decision-making.
Trend analysis helps you compare your business against other businesses to establish a
benchmark of how your business should be operating, at both the initial stage and
ongoing, or developing.
Analysing market trends is key to adapting and changing your business, keeping
current and ahead of the industry, and for continual growth.
Trend analysis consists of:
 trend data, for assessing changes within your own business performance over
time
 benchmark data, for comparing your business to a similar organisation (learn

about benchmarking your business for greater performance)
 market trends, for analysing the data from a whole industry or sector.
When used as a statistical method, trend analysis determines how a variable changes
over time. The variables have been graphically displayed by trend lines to explore the
tendencies our data have shown. The CER price trend must be determined in order to
construct a trend relationship Prices, which is our dependent variable, have been
examined separately together with three other independent variables, including, Brent
crude oil (bbl), natural gas, and rupee exchange rates versus the US dollar ($).
Trend analysis helps you compare your business against other businesses to establish a
benchmark of how your business should be operating, at both the initial stage and
ongoing, or developing.
46
1. TREND ANALYSIS OF CARBON CREDIT RATE AND NATURAL
GAS
Figure 4.2 graphical depiction of the trend lines for Carbon credit rates and
Natural Gas Prices demonstrates trend pattern between the two variables. Over
the course of the study, their trend shows a consistent and similar pattern.
Table 4.2: CER rates and Natural Gas
DATE CER RATES NATURAL GAS

Jan-20 24.31 1.841
Apr-20 20.39 1.949
Jul-20 27.22 1.799
Oct-20 24.19 3.354
Jan-21 33.18 2.564
Apr-21 49.31 2.931
Jul-21 53.69 3.914
Oct -21 59.08 5.426
Jan-22 89.24 4.874
Apr-22 84.45 7.244
Jul-21 78.55 7.926
Oct-22 79.97 6.355
Figure 4.1: Trend Analysis of CER Spot Prices and CER Future Prices
100
90
80
70
60
50
Natural Gas
40 Carbon Credit
30
20
10
0
Jul-20
Jul-21
Jul-22
Jan-20
Oct-20
Jan-21
Oct-21
Jan-22
Oct-22
Apr-20
Apr-21
Apr-22
47
2. TREND ANALYSIS OF CARBON CREDIT RATE AND BRENT
CRUDE OIL
Figure 4.3 graphic depiction of the trend lines of CER Prices and Crude Oil Prices
shows a non - similar tendency when CER Spot Prices were attempting to catch up
with the crude oil prices, after which there was no longer any trend. Therefore , this
shows lack of any trend pattern between the two distinct variables.
Table 4.3: CER rates and Brent Crude Oil
BRENT CRUDE
DATE CER RATES
OIL
Jan-20 24.31 49.67
Apr-20 20.39 26.48
Jul-20 27.22 43.52
Oct-20 24.19 37.94
Jan-21 33.18 55.04
Apr-21 49.31 66.76
Jul-21 53.69 75.41
Oct -21 59.08 83.72
Jan-22 89.24 89.26
Apr-22 84.45 107.14
Jul-21 78.55 103.97
Oct-22 79.97 94.83
Figure 4.2: Trend Analysis of CER rates and Brent Crude Oil
250
200
150
Brent Oil
100
Carbon Credit
50
0
Jul-20
Jul-21
Jul-22
Jan-20
Oct-20
Jan-21
Oct-21
Jan-22
Oct-22
Apr-21
Apr-20
Apr-22
48
3. TREND ANALYSIS OF CARBON CREDIT RATE AND CURRENCY
EXCHANGE RATE
CER Trend Analysis Figure VI depicts the Spot and Exchange Rate of the rupee vs
the dollar. Their trend during the course of the investigation clearly shows a similar
kind of pattern but not coinciding with each other. Therefore , this shows lack of any
trend pattern between the two distinct variables.
Table 4.4: CER rates and Currency Exchange rate
CURRENCY
DATE CER RATES EXCHANGE
RATE
Jan-20 24.31 71.54
Apr-20 20.39 75.077
Jul-20 27.22 74.916
Oct-20 24.19 74.554
Jan-21 33.18 72.877
Apr-21 49.31 74.05
Jul-21 53.69 74.337
Oct -21 59.08 74.915
Jan-22 89.24 74.529
Apr-22 84.45 76.52
Jul-21 78.55 79.336
Oct-22 79.97 82.77
Figure 4.3: Trend analysis of Carbon Credit rate and Currency Exchange rate
250
200
150
Brent Oil
100
Carbon Credit
50
0
Jul-20
Jul-21
Jul-22
Oct-20
Oct-21
Oct-22
Jan-20
Jan-21
Jan-22
Apr-22
Apr-20
Apr-21
49
3. TEST BASED ON CORRELATION
Correlation coefficient is a numerical measure of some type of correlation, measuring

a statistical relationship between two variables. Correlation coefficient is a statistical
concept, which helps in establishing a relation between predicted and actual values
obtained in a statistical experiment. The calculated value of the Correlation coefficient
explains the exactness between the predicted and actual values.
In order to draw a conclusion regarding their likely link, we look for correlation
between our variables. The correlation indices between the variables under
examination are listed below.
 Correlation coefficients are used to assess the strength of associations between

data variables.
 The most common, called a Pearson correlation coefficient, measures the
strength and the direction of a linear relationship between two variables.
 Values always range from -1 for a perfectly inverse, or negative, relationship
to 1 for a perfectly positive correlation. Values at, or close to, zero indicate no
linear relationship or a very weak correlation.
 The coefficient values required to signal a meaningful association depend on
the application. The statistical significance of a correlation can be calculated
from the correlation coefficient and the number of data points in the sample,
assuming a normal population distribution.
Table 4.5: The correlation coefficients between CER rates and the three key
variables under consideration.
CORRELATION NATURAL GAS BRENT CRUDE CURRENCY

OIL EXCHANGE
RATE
CARBON 0.879510037 0.955523768 0.600820172

CREDIT
The above table shows the correlation coefficient between CER rates and the three
key variables under consideration.
50
1. CORRELATION BETWEEN CARBON CREDIT AND NATURAL GAS
Carbon credit being the independent variable and natural gas is the dependent
variable. And followring are the collected values of Carbon credit and natural
gas.
Table 4.6: CER rates and Natural Gas
DATE CER RATES NATURAL GAS

Jan-20 24.31 1.841
Apr-20 20.39 1.949
Jul-20 27.22 1.799
Oct-20 24.19 3.354
Jan-21 33.18 2.564
Apr-21 49.31 2.931
Jul-21 53.69 3.914
Oct -21 59.08 5.426
Jan-22 89.24 4.874
Apr-22 84.45 7.244
Jul-21 78.55 7.926
Oct-22 79.97 6.355
Figure 4.4: Trend Analysis of CER rates and Natural Gas
Natural Gas
9
8
7
6
5
Natural Gas
4
Poly. (Natural Gas)
3
2
1
0
0 20 40 60 80 100
The prices of natural gas, on the other hand, are significantly more correlated with
CER rates, which also shows highly positive correlation between the two variables.
51
2. CORRELATION BETWEEN CARBON CREDIT AND BRENT CRUDE
OIL
variable. And following are the collected values of Carbon credit and brent crude
oil.
Table 4.7: CER rates and Bren Crude Oil
BRENT CRUDE
DATE CER RATES
OIL
Jan-20 24.31 49.67
Apr-20 20.39 26.48
Jul-20 27.22 43.52
Oct-20 24.19 37.94
Jan-21 33.18 55.04
Apr-21 49.31 66.76
Jul-21 53.69 75.41
Oct -21 59.08 83.72
Jan-22 89.24 89.26
Apr-22 84.45 107.14
Jul-21 78.55 103.97
Oct-22 79.97 94.83
Figure 4.5: Trend Analysis of CER rates and Brent Crude Oil
Brent Crude Oil

120
100
80
Brent Crude Oil
60
Linear (Brent Crude
40 Oil)
20
0
0 20 40 60 80 100
Although there is positive correlation between crude oil prices and CER rates,
they are rising in the same direction, showing highly positive correlation
between the two variables.
52
3. CORRELATION BETWEEN CARBON CREDIT AND CURRENCY
EXCHANGE RATE
variable. And following are the collected values of Carbon credit and currency
exchange rate of India vs US.
Table 4.8: CER rates and Currency Exchange rate
CURRENCY
DATE CER RATES EXCHANGE
RATE
Jan-20 24.31 71.54
Apr-20 20.39 75.077
Jul-20 27.22 74.916
Oct-20 24.19 74.554
Jan-21 33.18 72.877
Apr-21 49.31 74.05
Jul-21 53.69 74.337
Oct -21 59.08 74.915
Jan-22 89.24 74.529
Apr-22 84.45 76.52
Jul-21 78.55 79.336
Oct-22 79.97 82.77
Figure 4.6: Trend Analysis of CER rates and Currency Exchange rates
Currency Exchange Rate

84
82
80
78 Currency Exchange
Rate
76
Linear (Currency
74 Exchange Rate)
72
70
0 20 40 60 80 100
The findings demonstrate a significant link between CER Spot rate and
three variables. The exchange rate has a positive correlation coefficient (r),
this indicates a partial positive co-relationship between the two variables.
53
CHAPTER 5: CONCLUSIONS,
FINDINGS AND RECOMMENDATIONS
54
CONCLUSIONS
Firstly, we checked for the measures of central tendency and measures of
variability of the data. For this, we study the descriptive statistics of the data. After
examining the data, it was observed that all the variables under study namely to CER
rates and the three macro-economic variables viz. brent crude oil (bbl), natural gas and
exchange rate of rupee (₹) against dollar ($) are normal. Studying the corresponding
values of Standard Deviation of the aforementioned variables, it was observed that
there exists less degree of dispersion in all the variables except for the exchange rate
where the measure denotes existence of a negligible spread.
Secondly the correlation between the variables, by calculating the correlation

coefficients between CER rates and the three macro-economic variables viz.
coal/crude oil, natural gas and exchange rate of rupee (₹) against dollar ($). Results
show that there exist a strong correlation between CER rates. However, Exchange rate
and CER rates are negatively associated with each other. Brent oil prices and CER
rates are weakly related but they are moving in the same direction. On the other hand,
Natural gas prices are comparatively linked stronger to the CER rates.
The Indian government has already taken several interventions to curtail

crop residue burning. India losses a massive amount from the burning of crop
residue each year. By avoiding crop residue burning, India could have earned
109.97 billion rupees in 2011. Crop residue burning is not only a threat to
agriculture sector, this issue goes way beyond agriculture.
There are some economic factors like export of CO2, index of industrial
production, price of gold, greenex, price of power, price of coal is influencing
the factors before taking a decision to enter this segment. Emission trading, CDM
and JI are major mechanisms to manage the GHG gases. However, there is no
effective carbon reduction in the atmosphere. These mechanisms lead to reduce
carbon in one place and results carbon emission in some other place.
Finally, there is a need to promote global carbon market to address climate change
rather than seeking financial interest by the investment firms.
55
FINDINGS
Table 4.9. Showing the findings of the report
The mean of the Carbon credit rate in the

MEAN following data is 54.47 Rs. The mean of
other macroeconomic variables Brent
crude oil, natural gas and currency
exchange rate is 71. 27Rs. 4. 39 Rs.. and
75.81 Rs. respectively.
The median of the Carbon credit rate in

the following data is 54.69 Rs. The
MEDIAN median of other macroeconomic variables
Brent crude oil, natural gas and currency
exchange rate is 75.41Rs. 3.914 Rs.. and
4.915 Rs. respectively
The maximum value of Natural Gas,

Brent Crude Oil and Currency Exchange
MAXIMUM VALUE rate is 7.926, 107.14 and 82.77,
respectively.
The minimum value of Natural Gas,

Brent Crude Oil and Currency Exchange
MINIMUM VALUE rate is 1.799, 26.48 and 72.877,
respectively.
The range of the estimated values in th

following data of carbon credit is 68.85.
RANGE
The range of Natural gas is 6.127 , brent
crude oil is 80.66 and that of currency
56
exchange rate is 9.893.
The estimated standard deviation of the
following are as follows: Carbon Credit-
25.81, Natural Gas- 2.13 , crude oil –
STANDARD DEVIATION
27.53 and Currency Exchange rate – 2.82
The calculated variance in the following

VARIANCE ANALYSIS data is as follows: Carbon credit- 666.04,
Natural Gas – 4.53 , Crude Oil – 757.765
and Currency Exchange Rate- 8.06.
The estimated Kurtosis of the following

data are as follows: Carbon credit is
KURTOSIS negative i.e -1.69, kurtosis of Natural Gas
is also negative – 1.16 , kurtosis of Crude
Oil is also negative – 1.24 and and that of
Currency Exchange Rate is positive i.e
3.17
The sum of Carbon Credit is 599.27 , then

SUM the sum of Natural Gas is 48.336 and
Crude Oil is 80.66 and That of Currency
Exchange rate is 833.881.
All other variables exhibit positive

SKEWNESS symmetry with natural gas, whereas crude
oil is negatively skewed to the left, being
highly skewed and tilting to the right.
TREND ANALYSIS OF CARBON CREDIT AND :
Over the course of the study, their trend

shows a consistent and similar pattern.
NATURAL GAS
57
This shows lack of any trend pattern
between the two distinct variables.
CRUDE OIL
Their trend during the course of the

investigation clearly shows a similar kind
CURRENCY EXCHANGE OIL
of pattern but not coinciding with each
other
TEST BASED ON CORRELATION OF CARBON CREDIT AND :
0.879510037
NATURAL GAS
CRUDE OIL 0.955523768
CURRENCY EXCHANGE RATE 0.600820172
Turning to the empirical findings, the results show a significant relationship between
CER Spot and future prices; and CER Spot prices and Natural gas prices. Whereas,
crude oil prices and exchange rate does not impact the CER Spot prices significantly.
The prices of these credits are also determined significantly by their demand in the
international market.
The price of Indian credits eventually plunged to “zero” to because of lack of demand
in the world market for Indian Credits. This is a matter of grave concern for the
country. Lack of authenticity of the credits and proper monitoring of the reductions in
carbon emissions resulted in diminishing demand for these credits universally.
Finally, there still exist enormous opportunities for the country by indulging in the
trading of these credits internationally.
58
The country’s higher officials and policy makers should reconsider the problems
associated with the Indian Carbon market and come up with a suitable policy mix 69
for the country to initiate the recommencement of the trading of Indian credits in the
global carbon market. This would help in transformation of the lost confidence in the
Indian credits at the global platform. The aforesaid mechanism would lead to the
accomplishment of twin goals of revenue generation and Carbon emission reduction
with the improvement of overall carbon market scenario of the country. In other
words, it would result in killing two birds of with one stone.
59
RECOMMENDATIONS
Government must strive to establish rules and regulations that would

ensure fair and impartial trading practices where there is no tolerance of
nepotism, bribery and other corrupt practices involved in the trade. In order to
ensure transparency of activities in operations the government must introduce
standards to maintain accountability and reporting of transactions by corporates
engaged in clean development mechanism (CDM).
Another fish in the tank would be involvement of small and

marginalized group of people and groups comprising of farmers, artisans etc. in
the unorganized sector which can contribute directly to carbon reduction
through greater labor involvement and use of traditional techniques of
production that do not require heavy reliance.
In order to facilitate carbon trade, government can reformulate fiscal

policy by introduction of instruments like “carbon tax” that would put a
monetary burden clause on enterprises/ activities that cause GHG emission.
Based on maxim of „PPP i.e. Polluter Pay Principal the aforesaid tax shall put a
financial implication on carbon emission thereby discouraging emission
causing production practices and encouraging entrepreneurs to invest in
technology that helps in carbon sequestration. The tax revenue generated shall
be used by government in various development activities much needed by our
country.
All over the globe various studies have been conducted which have
found that there is a positive relationship existing between the firms‟
profitability and its environmental initiatives.
60
In today scenario, environmental issues gaining greater attention across
the globe have placed pressure on all industries, including financial services
“banks” to go green, which were till now considered as environmental friendly.
Banks have always been an important source of funds for commercial projects
and hence, they play a vital role in creating a sustainable environment by
encouraging eco-friendly projects and lending to only those industries which
follow some green norms, This is known as GREEN BANKING, contributing
in reducing carbon foot prints by providing assistance to companies involved in
renewable and clean energy and technology. Following are the products that
can be provided by the banks to transform their processes to "Go Green":
1. Green mortgages
2. Green loans
3. Green credit cards
4. Green savings accounts
5. Green checking accounts
6. Green CDs
7. Green money market accounts
8. Mobile Banking
9. Online banking
10. Remote deposit Capture (RDC)
To increase the market for carbon trading Forward Contracts

(Regulation) Amendment Bill has already been presented in the Parliament.
This amendment, if accepted, would also help the merchants and agronomists
to utilize NCDEX as a podium for trading of carbon credits. Nevertheless, to
unleash the true potential of carbon trading in India, it is important that a
distinct organization should be formed as the Indian Contracts Act is not
sufficient to administer the vowed issues relating to carbon credits.
61
The Global cooperation require not only few countries may perform
well environmentally and others large emitter buy credits through economic
power. However the overall emission not reduced it mitigate only through
green country.
The emission reduction obligations not only should on emerging world

only. It should be on developed countries too and they should provide financial
and advance technology to the developing economy to mitigate overall carbon
emission targets
62
BIBLIOGRAPHY
63
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A

“ CARBON EMISSIONS TRADING IN INDIA”

Department of Business and Industrial Management

Veer Narmad South Gujarat University, Surat

Partial requirement for the fulfilment of the degree of

Master of Business Administration (MBA)

Vora Drashti Nareshbhai

SPID No: 2021070207

Under the guidance of

Ms. Foram Modi

Department of Business and Industrial Management

Veer Narmad South Gujarat University, Surat

DEPARTMENT OF BUSINESS AND INDUSTRIAL

PROJECT COMPLETION CERTIFICATE

Ms. Foram Modi Dr. Manish Sidhpuria

(Project Mentor) ( Head of Department)

Department of Business and Department of Business and

Date: 13th April, 2023 ____________________

Place: Surat Drashti Vora

SPID No: 2021070207

Department of Business and Industrial

13th April 2023, Vora Drashti N.

Descriptive Statistics of CER rate and the

CER rates and Natural Gas

CER rates and Natural Gas

CER rates and Bren Crude Oil

4.9 Showing the findings of the report 56

Trend Analysis of CER Spot Prices and CER

Trend Analysis of CER rates and Brent Crude

Trend analysis of Carbon Credit rate and

Trend Analysis of CER rates and Natural Gas

Trend Analysis of CER rates and Currency

The United Nations Framework Convention on Climate Change (UNFCCC) was

WHAT IS CARBON TRADING?

Carbon trading is the buying and selling of a new, artificially-created

In comparison to a separate set of tools available to governments to affect behaviour,

Politics Oil and Gas

Paris Pledge Agriculture and Forest

Coal Impacts and Adaptation

Low Carbon Energy Climate Finance

Energy Efficiency Transport

India is the second

7. OIL AND GAS

Irrigation using highly

9. IMPACTS AND ADAPTATION

10. CLIMATE FINANCE

Activities finalised to be considered for trading of carbon credits under Article

I. GHG MITIGATION ACTIVITIES:

Renewable energy with storage (only stored component)

II. ALTERNATE MATERIAL

III. REMOVAL ACTIVITIES:

Carbon Capture Utilization and Storage

These activities will facilitate adoption/transfer of emerging technologies and may be

 CARBON CREDITS CAN BE GROUPED INTO THREE

Avoidance projects (they avoid emitting greenhouse gasses

ARE CARBON EMISSIONS POLLUTION ?

As children — though it depends which decade you grew up in — we often heard

According to National Geographic, carbon dioxide is considered a pollutant, though

HOW DO CARBON EMISSIONS AFFECT THE

WHERE DO MOST CARBON EMISSIONS COME

ARE CARBON EMISSIONS INCREASING OR

ARE CARBON EMISSIONS DANGEROUS?