Carbon Credit And Intellectual Property Rights

Introduction

Rapid industrial growth has resulted in increased energy consumption and consequently the level of carbon dioxide, and other greenhouse gas emissions are also rising. As a part of United Nations Frame Work Convention On Climate Change, the Kyoto Protocol was brought into existence to create policies and measures to reduce Green House Gas emissions. As a part of this protocol, the industrialised nations were to reduce their emission of greenhouse gases.

Comprehensive access to clean technologies is fundamental to meet the Paris Agreement goal of restraining the amplification in global temperatures. This requires extensive technology transmissions and transfers from North to South as 90 per cent of the intensification of global carbon emissions until 2050 is expected to transpire in the developing economies. Since the majority of low-carbon technologies are being invented and manufactured in developed countries the transfer of such green technology to counter the ever-increasing environmental issues. Japan, USA, Germany, South Korea, and France are the nations which together account for 75 per cent of the low-carbon inventions patented globally from 2005 to 2015.

Meaning and Background

CARBON CREDIT: it is a tradable permit or certificate that allows the holder to emit one tonne of carbon dioxide or other greenhouse gases with a carbon dioxide equivalent (tCO2e) equivalent to one tonne of carbon dioxide.

In the year 1992 UNFCCC (United Nations Frame Work Convention On Climate Change) was adopted at Rio De Janeiro in Brazil. The primary objective behind this convention was to stabilize Green House Gases within a time frame. As a part of this convention, the Kyoto Protocol was signed in December 1997 at Kyoto in Japan. In the year 2012 Kyoto Protocol was amended and the first commitment period of the protocol concluded. The amendment adds new emission reduction targets for second commitment period which is 2012-2020 for participating countries (1).

The Kyoto Protocol divides nations into industrialized and developing countries. The Countries which are industrialized, operate in emissions trading market, giving each state it’s own emissions standards to meet. If any nation emits less than its limit, it may sell the surplus credits to those countries that do not attain their Kyoto level goals through the Emission Reduction Purchase Agreement (ERPA).

Cap And Trade

It is also known as emission trading. It is a term for government regulatory program which is designed to limit the level of emissions. Purpose of cap and trade is to create a market price for emissions.

Example of carbon credits

Under cap and trade, a country emitting less than its capped limit may sell the unused credits to another nation exceeding its capped limit (2). For instance, state ‘A’ has a cap of 100tons but produces 120 tons of emissions and exceeds its limit. The other country ‘B’ also has 100 tons but produces only 80 tons of emissions. As a result, it will have 20 surplus credits.
The country ‘A’ may purchase the extra credits from country ‘B’ to remain in compliance. Without the purchased credits country ‘A’ would face penalties. When the fines exceed the cost for buying credits, the country exceeding its cap will prefer purchasing the credits. When the value exceeds the fine, some states accept the penalties.

Mechanism Laid Down By Kyoto Protocol

For emission reduction, specific measures are provided in Kyoto protocol; primarily there are two mechanisms:
1. National measures
2. Additional measures

The Flexibility Mechanism

Inflexibility mechanism for emission reduction, there are three ways of controlling the emission.

(a) Clean Development Mechanism
(b) Joint Implementation
(c) Emission Trading

India’s Stance On Carbon Credit

In 2017, the union cabinet gave its approval to ratify the second commitment period of the Kyoto protocol (2012-2020). The first commitment period of the Kyoto protocol was 2005-12 and the second commitment period was adopted in 2012. Till 2017 only 65 countries had ratified the Second Commitment Period (2013-2020) of the Kyoto protocol (3).

Carbon Credit And Intellectual Property Rights

Intellectual Property Rights:

these are legally enforceable rights over inventions and other creations of the mind. Intellectual Property Rights include copyrights, trademarks, and copyrights.
The international dissemination of low-carbon technologies has emerged as a keystone of global climate debates since the implementation of the United Framework Convention on Climate Change (UNFCCC). The inevitability of superior global technology transfer has led to the conception of the Technology Mechanism, which organizes UNFCCC measures pertaining to technology concerns.

The essential intellectual property rights for low-carbon technologies are likely to be patented, which allow the patent owner to stop its use by others (4). They will be an incentive for creating the new Clean Energy Revolution. Intellectual Property Rights will be the catalyst, for the investments, innovation, diffusion and use of the low-carbon technologies which we need to reduce carbon dioxide emissions (5).
IPRs play a fundamental role in the development of low carbon emitting technologies and their transfer from one country to another. If a state is buying low carbon emitting technology from some other country, then IPRs help the seller to get the profit out of the idea which it had created.

Conclusion

To fulfil the obligation undertaken by the Paris Agreement will entail all states to adopt low-carbon technologies to facilitate their economy. Solidifying Intellectual Property rights can help increase Foreign Direct Investments in some of these areas. However, it might also decrease technology imports in other sectors. Therefore, any alteration of the level of IPR security should be dealt with on a case-by-case base, depending on the technological needs and priorities of each country.