Who would have imagined carbon to become a priced commodity that can be traded one day? The Kyoto Protocol of 1997 envisaged exactly that when leaders from 38 industrialised nations came together and agreed to follow a system of carbon trading, pledging to bring down their emissions by an average of 5 per cent below the 1990 levels. The seminal environmental treaty put a cap on emissions and decided that the countries that wanted to emit more needed to buy carbon credits from countries that emitted less. That is how the carbon market came into being, a place where carbon credits began to be purchased and sold.
What started over two decades ago is picking up pace now as carbon markets—compliance and voluntary—across the world are bustling with energy today.
India is not too far behind either, armed with its own buoyant carbon market with several carbon traders, companies eagerly engaging in buying and selling credits, emission trading schemes by different states and other activities in the pipeline.
“The recent interest in the carbon market is fuelled by the private sector acknowledging that net zero transition is necessary as is the need for financing the same. Companies have realised that efficient processes are good economics and therefore there is a need for investing in this,” says Prarthana Borah, Director, India, Carbon Disclosure Project.
The Making Of A Market
Between the Kyoto Protocol and the milestone Paris Agreement in 2015, there was a long silence. However, things seem to have changed after that.
“From 2019 onwards, there has been a lot of excitement, majorly driven by the private sector by science-based targets,” says Jasmeet Singh Bajaj, director, India, FairClimateFund, which works in the field of climate strategies, carbon footprints and CO2 reduction.
Case in point: EKI Energy Services. The Indore-based private company, which has been in the business of carbon trading for more than a decade, entered its best phase only in the last couple of years. The climate change advisory company made its BSE debut in 2021 and also achieved a $1 billion valuation earlier this year.
Today, EKI is