Can Carbon Trading help create Greener India


Carbon Trading or Carbon Emission Trading is defined as,

Carbon emissions trading is emissions trading specifically for carbon dioxide (calculated in tones of carbon dioxide equivalent or tCO2e) and currently makes up the bulk of emissions trading.

It is one of the ways countries can meet their obligations under the Kyoto Protocol to reduce carbon emissions and thereby mitigate global warming.

The concept is widely popular in the west, but the idea has been picking up in India too. The basis ideology behind the Carbon trading is a win-win situation for organization in my opinion.

Commercial and Institutional buildings invest in green technology, reduce their carbon footprint thereby help reduce the pollution. But, the icing on the cake comes in the form of tadable Carbon Credits which the companies can collect and can sell them off to boost its profits.

But then why isn’t every company doing it? The answer lies in stupendous costs associated with turning green and become eligible to qualify for a Green Company.

Moreover, it is an incremental expense and not a one time setup of sorts.Add to that a high gestation period or a long time to start getting the ROI, it is unlikely that many organizations feel the need for it. But, isn’t it the responsibility of Corporate India to contribute towards a Greener India given they are the ones churning out turns of waste into the environment via industrial waste, exhaust fumes etc.

To get an idea of the the costs associated with becoming a LEED (Leadership in Energy and Environmental Design) certified Indian institution, figure the table below:


% Increase in Cost

Payback (years)

Rating achieved

CII-Godrej GBC,Hyderabad




ITC Green Centre,Gurgaon








Source( CII-Godrej Green Building Council)

The costs are no doubt high for construction of Green Buildings but the overall lifecycle operating cost of operating green buildings is comparatively lower than the regular buildings. Coupled with earnings from Carbon Credits, the investment should be every penny worth it.

In my opinion there are some roadblocks which might be stopping the companies to go global

  • It requires investments in time and resources since the process is a little complex.
  • Since environmental concerns are not directly related to the companies, monetary investment in Green India may not figure in the race to profitability
  • Carbon Trading rules under the Kyoto Protocol are not completely transparent and dictated by emission standards in Europe. So, should some major changes be made to the protocol, Indian companies may not want to be sitting on huge Carbon Credits without any buyers.

It has been said that India and China are touted as the biggest sellers of Carbon Credit to the world. With the growing awareness about Green Buildings and waste reduction, I hope Corporate India paves way for a greener future and add to its profits at the same time.

What are your thoughts on the same? Can India Inc. do with more Green Buildings and a healthy Carbon Credit Seller or the investment rationale is not profitable enough, or should the government step in to ensure that companies line up to become Greener?

[This post has been written by Ankit Agarwal, an ERP Consultant by profession, a wannabe entrepreneur and stock market stalker by passion]

1 Comment
  1. Syam says

    India has huge potential for another green industry, algae biofuels. It has the twin advantage of salable carbon credit and energy security for the nation. The tropical climate and plenty of land (degraded) make India an ideal location for this renewable fuel industry. Bio diesel, electricity, gasoline, hydrogen etc can be manufactured from algae biomass. Algae is not a competitor for arable land or freshwater.
    www energymicrolgae com

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