Carbon Finance – Innovative Financing for Sustainable Development
Abstract :
As we know that Greenhouse Gases (GHGs)
only causesdamage to the environment but that is not the case in the present
scenario. Now it helps in generating finance for the organization. It directly
helps for sustainable development and indirectly helps organization
particularly to the developing countries to raise the finance. The Clean
Development Mechanism (CDM) aims to promote sustainable development in
developing countries and allow industrialized countries to earn emissions
credits from their investments in emission reducing projects in developing
countries. Carbon Finance term is applied to investment in GHGsemission
reduction projects and the creation of the financial instruments that are tradable
on the carbon market.CDMis recognized through the Kyoto Protocol allowing
offset of emissions in developed countries by the investments in emissions
reductions projects in developing countries like India, China, Pakistan,Sri
Lanka etc.The Kyoto Protocol is a protocol to the United Nations Framework
Conventions on Climate Change (UNFCC) aimed at fighting global warning adopted
in 1997 came into effect in the year 2005. The World Bank has constituted the
World Bank Carbon Finance Unit (CFU). CFU uses money contributed by governments
and companies in OECD countries to purchase project based GHG emissions
reductions in developing countries. According to Report2012 prepared by World
Bank Carbon Finance Unit, it states that carbon market grew in total value by
11% in 2011, to $176 billion and where transaction value reached a new height
of 10.3 billion tons of carbon dioxide equivalent (CO2e).