Should the pursuit of carbon credit and clean development mechanism set up under the UNFCCC be maintained, even though there has been a massive slide in the value of carbon credit? Discuss with respect to India’s energy needs for economic growth.
Subtopic: Climate Change · Carbon markets & CDM
How to structure your answer
Introduction: Define the Clean Development Mechanism (CDM) and carbon credits (CERs) under the Kyoto Protocol, and note the post-2012 price collapse.
Body: (1) Why the value slid — surplus credits, weak demand, expiry of the first commitment period. (2) The case to retain it — cheapest abatement route, technology and finance transfer, jobs in renewables for a developing economy. (3) Link to India's energy needs — coal-heavy base, rising demand, and how market mechanisms square growth with low-carbon transition.
Conclusion: Keep the architecture but reform it toward the Paris Article 6 market.
Written within the word limit
239 words · target 250 words · 11 min
Introduction: The Clean Development Mechanism (CDM), set up under the 1997 Kyoto Protocol, lets developed nations meet their targets by funding emission-cutting projects in developing countries, which earn tradable carbon credits called Certified Emission Reductions (CERs). After 2012 their price slid from over €20 to near zero, raising doubts about whether the model is still worth pursuing.
Body:
- Why the value fell: a glut of issued credits, the close of the Kyoto first commitment period, and weak demand as several developed economies dropped or watered down their binding targets together crashed the CER price. With no buyers, the market signal that was meant to reward clean investment all but vanished.
- The case to retain it: the mechanism still channels low-cost finance and clean technology to where abatement is cheapest. India hosted one of the largest shares of registered CDM projects, spanning wind, biomass, and waste-heat recovery in cement and steel plants, building local capacity, manufacturing, and green jobs. Scrapping it would punish the very economies that built projects in good faith.
- India's energy needs: a fast-growing economy with a coal-heavy base must expand power supply while bending the emissions curve. Carbon markets let India earn revenue for renewables and efficiency gains, squaring growth with the equity principle of common but differentiated responsibilities.
Conclusion: The architecture should be kept but reformed — capping supply, restoring demand, and migrating to the Paris Agreement's Article 6 market — so it once again rewards clean investment in growing economies.
What an examiner expects to see
- CDM and Joint Implementation and International Emissions Trading are the three flexible mechanisms of the Kyoto Protocol (1997)
- Carbon credits under CDM are called Certified Emission Reductions (CERs)
- CER prices collapsed after 2012 due to oversupply and weak demand at the close of the first commitment period
- India was among the largest hosts of registered CDM projects (renewables, biomass, energy efficiency)
- Mechanism transfers clean technology and climate finance to developing countries at lowest abatement cost
- Principle of Common But Differentiated Responsibilities (CBDR) under the UNFCCC underpins India's stance
- Paris Agreement Article 6 provides the successor framework for international carbon markets
- India's coal-heavy electricity mix and rising demand make market-based incentives valuable for a low-carbon transition
Concrete cases, schemes and judgments
- India's registered CDM wind and biomass projects earning CERs
- Waste-heat recovery and energy-efficiency CDM projects in Indian cement and steel plants
- Kyoto Protocol first commitment period 2008-2012 and its CER surplus
- Transition to Article 6 carbon markets under the Paris Agreement
- Perform Achieve Trade (PAT) scheme as a domestic market-based efficiency instrument