Tuesday, November 01, 2016
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Carbon Credit Business

"The future of this planet is governed by its responsible global citizens. And future of mankind is judged by our actions today."

We have seen the stock market, currency market, commodities market and to make the world responsible to the environment we live in, we have a Carbon Credit market in the making.

The concept of Carbon credit came into existence as a result of increasing awareness about the need to reduce, global warming. It took the formal form after the international agreement between 149 countries, popularly known as Kyoto Protocol. Carbon Credits are certificates awarded to projects that are successful in reducing the Green House Gases (GHG) emissions that cause global warming.

It is estimated that 60 –70% of GHG emission is through fossil fuel combustion for electricity generation and in industries like cement, steel, textiles and fertilizers. Some green house gases like hydro fluorocarbons, methane and nitrous oxide are released as by – products of certain industrial process, which adversely affect the ozone layer, leading to global warming. At Amos we have a team dedicated to this practise to help corporate track their carbon foot print and build credits that are tradeable.

The Market Place

The genesis of Carbon Credit Market is inseparable with KYOTO PROTOCOL.The Kyoto Protocol is an international treaty to reduce GHG emissions blamed for global warming. The Protocol, in force as of 16 February, 2005 following its ratification in late 2004 by Russia, provides the means to monetise the environmental benefits of reducing GHGs. Kyoto Protocol is a voluntary treaty signed by 149 countries, including the European Union, Japan and Canada for reducing GHG emission by 5.2% below 1990 levels by 2012.

The preliminary phase of the Kyoto Protocol is to start in 2007 while the second phase starts from 2008. The penalty for non – compliance in the first phase is Euro 40 per tonne of carbon dioxide equivalent. In the second phase, the penalty will be hiked to Euro 100 per tonne of carbon dioxide. The protocol and new European Union emissions rules have created a market in which companies and governments that reduce GHGgas levels can sell the ensuing emission ‘credits’. These are purchased by corporates and governments in developed countries that are close to exceeding their GHG emission quotas.

For trading purposes one credit is considered equivalent to one tonne of carbon dioxide emission reduced. Such a credit can be sold in the international market at a prevailing market rate. The trading can take place in open market. However there are two exchanges for carbon credit viz Chicago Climate Exchange and the European Climate Exchange.

CO2 Products

Inthe CO2 market the following are the tradable instruments. We specialise in processing and building such products adhering to compliance and protocol of UNCC.

  • Issued Certificate Emission Reductions (iCERs)
  • Emission Reduction assets from Registered projects but CERs to be issued (tCERs) shortly.
  • Verified Emission Reductions (VERs).
  • The issued CERs are emission reduction certificates given to projects approved by Validators and registered with CDM

Executive Board (EB). Theactual emission reductions achieved by these Registered projects are quantified, verified by UNFCCC accredited Verifiers and on their recommendation, CERs are issued to the Project proponent by CDM (EB). That is CER’s are real assets in hand without anyrisk.


tCERS are the emission reduction assets expected to be generated from the Registered projects. i.e projects are already registered but the emission reductions are yet to be measured, quantified and issued by CDMEB. It is only a question of time before issuance.


There can be some cases like a project was commissioned in 2005 but the project could be registered in 2007 only, due to various reasons. Asper CDM (EB) rules, the CERs would be eligible only from the date of registration. But the emission reductionsachieved by the project during the period from date of commissioning and Registration with CDM (EB) could be issued as “Verified Emission Reductions”. These reductions do not command a high price like CERs as the market for VERs is limited.

Our Services

At Amos we focus both Advisory Services and trading of Carbon Credits.The following are the services offered by our Carbon Credit Desk; Trading services to identify a CDM project willing to sell the emission reduction assets.

  1. To submit a “Asset information sheet” with basic details of the project to the Purchase approval committee.
  2. On approval by the committee, to forward the initial Term Sheet to the Seller.
  3. On seller accepting and signing the Term specified, forward Emission Reduction Purchase Agreement (ERPA) to the seller specifying the payment terms which in most cases would be “on delivery”.
  4. To conclude the CER’s purchase deal.
  5. To sell CER’s stock and book the profit.
  6. To hold CER’s stock.

Advisory Services

  1. To identify CDM project.
  2. To enter into advisory agreement.
  3. To collect advance payment.
  4. Preparation of PIN and PDD.
  5. Appointment of validators to do validation of the project.
  6. Forwarding for approval from ministry of environment and forest.
  7. NOC from ministry.
  8. Approval obtained from ministry forwarded to validators for recommending registration with UNFCCC.
  9. Review by UNFCCC in executive board meeting
  10. Registration
  11. Payment of fees to UNFCCC
  12. Third party verification by verifiers, accredited agencies appointed by UNFCCC.
  13. Verification report submission.
  14. CER’s issued. Receipt of advisory success fees.


Professional Services

Our professional services include statutory, external and internal audit, accounting and financial management consultancy, accounting and finance outsourcing, project evaluation and feasibility studies, due diligence reports and allied services.

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