The other day, I was discussing with a friend of mine , the world is changing faster than people can even imagine. The opportunities are plenty but spotting these opportunities is the name of the game.

One such opportunity, presently being offered is “Carbon credits “. What are carbon credits ? What is the size of the opportunity and How can we seize it. These are the questions most of may be asking. To those people, this article is dedicated. So read ahead and seize the moment.

Long back , not very long back though in 1990 , countries came together and decided that they would do something about the environment and reduce the levels of emission of polluting gases . However it was not until 1997 when they once again came together was something tangible achieved . They met in Kyoto – Japan and reached an agreement known as the Kyoto Protocol . Most developed countries signed this agreement other than the United States .

According to this Protocol , The most polluting countries must pay for the people who use more responsible & environment technologies . Therefore there are 2 things that polluting companies could do . Either reduce the level of their pollution through adoption of better technologies & earn carbon credits or Buy Carbon credits from companies which are less polluting than environmental standards set for that industry. One carbon credit equals 1 ton of CO2 gases which can be expelled into the atmosphere. So what do most companies do – They go ahead and exercise the second option cause it costs $300-350 for the first option and $18-20 to exercise the second option , though this is expected to go up significantly in the future . Just as we trade in commodities such as gold , silver , copper or grains etc , similarly carbon credits are being traded in the world markets and even in India ,we have the MCX exchange which trades in carbon credits .

India & China are suddenly sitting on surplus carbon credits which they can now sell to the western countries . It is expected that by 2010 , India will be able to sell a surplus of $25Billion worth of carbon credits .

So where does this money actually come from . Historically the most polluting Industries are the Steel , Cement , Textiles, power , sugar etc . Infact Indian companies have woken up to this opportunity and in recent times we may have seen reports such as Jindal steels ready to sell $225 M worth of credits over a 10 year period.

Similarly a lot of other companies such as Gujarat Flourochemicals , Suzlon , & Shree Renuka sugars , Reliance Industries , Grasim , Triveni Engineering ec have all been in the news recently for surplus carbon credits . Tata Sponge Iron Ltd has also generated surplus carbon credits.

More than 400 companies have registered for trading their surplus carbon credits. So much so that it is quite likely that companies could end up making more money trading in carbon credits than their own core businesses.

However the present arrangement to trade in carbon credits is valid only until 2012 and more will be known after the present Copenhagen convention on the future of trading in carbon credits.

So go ahead and spot the these companies which are registering for carbon credits as they are likely to do well on account of windfall which is likely to accrue to them.