Carbon Finance - Addressing Climate Change in Capitalism - Ronak Raval (Research Thesis from 2006-08)

Carbon Finance: Addressing Climate Change in Capitalism

Author: Ronak Raval
Institution: The Indian Institute of Planning and Management, Ahmedabad
Thesis Guide: Prof. Snehal Desai, Senior Manager, Adani Group
Submission Date: 15 November, 2008

This thesis explores the financial mechanisms aimed at addressing global warming through market-based solutions, focusing on the concept of Carbon Finance. The study investigates the causes and impacts of global warming, the role of greenhouse gases, and evaluates the Kyoto Protocol's mechanisms such as Emissions Trading, Clean Development Mechanism (CDM), and Joint Implementation. Through primary research including interviews and project analysis, the thesis provides insights into the functioning of carbon markets and highlights the potential for carbon financing in developing economies. It emphasizes the need for innovative solutions, policy changes, and sustainable practices to effectively mitigate climate change.

Key Sections:

• Prologue: Global Warming
• Alternate Strategic Solutions
• Global Consensus & Initiatives
• Kyoto Insights
• Kyoto Protocol: Convention & Mechanisms
• Carbon Market
• Literature Review
• The Ultimate Transition: Conclusions and Recommendations

This comprehensive analysis underscores the importance of integrating financial strategies with environmental goals to create a sustainable future.

Each of the sections above contain key points as described below.

Prologue – Global Warming

• Issue Background: Global warming is the rise in average near-surface temperature of the Earth primarily due to human activities. The past century, especially post-industrialization, has seen a significant increase in atmospheric CO2, leading to various adverse impacts such as changes in precipitation patterns, glacier retreat, and increased sea levels.
• Key Abstracts: Global warming has triggered irreversible climate impacts. Human-induced global warming has increased due to industrial activities. Controlling further emissions and investing in green energy solutions are imperative.

Alternate Strategic Solutions

• Profile of Pollutants: Identifying the sources and impact of various greenhouse gases (GHGs) is crucial for tackling global warming. Steps include reducing emissions, afforestation, and adaptation to climate change outcomes.

Global Consensus & Initiatives

• Need for a Protocol: The global community recognized the need for a coordinated approach to address climate change, leading to the creation of frameworks like the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.

Kyoto Insights

• Basic Framework of the Protocol: The Kyoto Protocol established legally binding targets for reducing GHG emissions for participating countries. It introduced mechanisms such as Emissions Trading, Clean Development Mechanism (CDM), and Joint Implementation.

Kyoto Protocol: Convention & Mechanisms

• Mechanisms Overview:
  • Emissions Trading: Allows countries to buy and sell emission allowances.
  • Clean Development Mechanism (CDM): Enables developed countries to invest in emission reduction projects in developing countries.
  • Joint Implementation: Permits countries to earn emission reduction units from projects in other developed countries.

Carbon Market

• Introduction and Market Trends: The carbon market facilitates the trading of emission allowances, promoting investment in low-carbon technologies. Trends indicate a growing interest and investment in green technologies and renewable energy.

Literature Review

• Documentaries and Reports: Documentaries like "An Inconvenient Truth" highlight the urgency of addressing global warming and the need for international cooperation and policy changes.

The Ultimate Transition

• Conclusions and Recommendations: Effective climate action requires a combination of transparent systems, political will, business involvement, innovations, and a societal shift towards sustainable practices.