Emissions trading could prove to be the next big money spinner for India.The landmark agreement between the Multi-Commodity Exchange (MCX) of India’s and Chicago Climate Exchange (CCX) on September 21, 2005, opens new vistas of opportunities for India Inc. investors, both corporate as well as individual, would get an opportunity to trade in derivative instruments such as Carbon Financial Instruments and Sulfur Financial Instrument futures contracts on the MCX trading platform. The move comes in the wake of Kyoto Protocol which was signed eight years back in 1997, but came into effect only this year on February 16.

The Kyoto accord aims to cut greenhouse gas emissions below the 1990 levels, by 2012. The protocol makes it mandatory for emitters to buy ‘Carbon Credits’ (Carbon Credits refer to the permission to emit one metric tonne of Carbon by the burning of fossil fuels) from companies/countries who earned these credits for adopting environment- friendly processes, if their emissions exceed the specified limits. It’s simple; if you pollute more than you are allowed to, you either pay for it or adopt environment-friendly measures. Carbon futures/options are derivative instruments whose underlying asset is the carbon credits. Trading in these credits is aimed at reducing the levels of greenhouse gases in our environment. And there is big money to be made, too.