Carbon trading exchange in Sri Lanka

By Dilrukshi Handunnetti
Published: Saturday 15 February 2003

sri lanka is all set to introduce a legislation to facilitate the country's first carbon trading exchange programme. The programme aims to include projects that reduce greenhouse gas (ghg) emissions and seeks to trade in the resulting emission reduction credits. ghgs are responsible for climate change and global warming.

At present, around five such emission reduction projects are operational in Sri Lanka. According to a senior official in the Lankan ministry of environment and natural resources, an expert committee has approved the draft national policy on the Clean Development Mechanism (cdm). The policy, along with the proposal for the exchange programme, will soon be submitted to the cabinet for approval.

The exchange scheme -under the ministry of trade and consumer affairs - will also involve the private sector. Companies that participate in the programme will be required to curb their ghg emissions. Businesses which fail to adhere to the specified levels can buy emission credits from those whose emissions are within the limit. Projects generating credits to be traded include renewable energy, energy efficiency improvement, and afforestation and reforestation schemes.

Based on market sentiment, the ministry is demanding only us $5 per tonne of carbon. B M S Batagoda, a director in the ministry of environment and natural resources, says that the price has been kept low because carbon is traded as a by-product. The country intends to sell 200,000 tonnes of carbon annually and is hoping that the prices will increase over a period.

A committee comprising experts and representatives from the ministry and private sector has been set up to assess cdm project proposals. cdm, a mechanism under the Kyoto Protocol, helps industrialised countries buy cheap emission reduction credits from developing countries by investing in clean energy projects in the latter.

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