Carbon Trading in Indian Derivative Market: An Econometric Validation

Namita Rajput; Shelly Oberoi; Simple Arora

Namita Rajput Associate professor, Sri Aurobindo college, University of Delhi, India
Shelly Oberoi Assistant Professor, Sri Aurobindo college, University of Delhi, India
Simple Arora Assistant Professor, Shyam Lal College, University of Delhi, India

Abstract

Global climate change has already had observable effects on the environment. Glaciers have shrunk, ice on rivers and lakes is
breaking up earlier, plant and animal ranges have shifted and trees are flowering sooner. According to Intergovernmental Panel on
Climate Change the net damage cost of climate change are likely to be significant and is likely to be increase over overtime.Carbon
dioxide is a big cause of global panic as its concentration has been rising alarmingly in the atmosphere. On the other side it has
created a global carbon market also. Hence with growing concerns owing to Kyoto Protocol amongst countries to curtail pollution
levels along with sustaining their economic growth, the Emission Trading (ET) industry has started actively providing support to
bring down green house gas emission by allocating a monetary value and is expected to come forward as a massive market of global
emission trading. The developed countries are supposed to meet certain carbon emission targets fixed by their respective governments. Conversely if they are unable to do so they have an option of buying these in the market from those companies which have
surplus of them. This practice is known as carbon trading.