‘08 could be the tipping point for voluntary carbon markets

‘08 could be the tipping point for voluntary carbon markets 15 Jan, 2008, 1534 hrs IST,Mehul Verma, INDIATIMES NEWS NETWORK

NEW DELHI: Global warming has been successful in creating a growing consciousness to trade carbon emission. World over experts have been analyzing the carbon markets and various studies are being held out to tap the benefits of carbon. However, there remains a huge untapped potential in the voluntary carbon markets waiting to be explored. Year 2008 could very well be the tipping point for the voluntary carbon markets. The concept of voluntary carbon markets (VCM) consists of companies, governments, organizations, organizers of international events and even individuals taking the responsibility of their carbon emissions by voluntarily purchasing the carbon offsets. In fact, the voluntary carbon markets function in a much simpler way as compared to Clean Development Mechanism (CDM), created by Kyoto Protocol. Under the voluntary carbon markets, the carbon offsets may be purchased by retailers or organizations of relatively small size. On the other hand, the CDM market is known for its voluminous trading. Being less complicated in terms of paper work and volume, the voluntary carbon markets offer an ideal platform for mid-size trading business operations. à The second advantage of a voluntary carbon markets over Clean Development Mechanism (CDM), lies in the equality of treatment. Clean Development Mechanism (CDM) favors developed nations over developing nations in terms of fixing emissions norms. Voluntary carbon markets are easier to operate and stand fair chances of growth in developing economies. According to Dr Anne-Marie, expert on climate change with Lloyd's Register Quality Assurance (LRQA), “The voluntary carbon market refers to any sale or purchase of emission credits or emission reductions that occur outside a regulated market. A regulated market is one set up by governments such as Clean Development Mechanism (CDM) and European Union Greenhouse Gas Emission Trading Scheme (EU ETS).” Voluntary carbon markets have historically served as sources of experimentation and innovation in the carbon markets. These markets most likely to reach poorer and smaller communities in developing countries faster. This is, in partly, because they are free from red-tapism & bureaucracy and offer a lower transaction cost compared to regulated carbon markets. No Forwards Trade In such markets, there are no widely accepted standards, processes for certification and verification, or requirements to list credits on established registries. Even then, the unorganized players of the carbon market stand a better chance to get the ticket to trade as the entry level requirements in this market are simpler. Reports suggest _ as a part of the consolidation in the market that began to take shape in 2006, various groups- non-profits and industry associations aim at creating rigorous standards and processes as a way of ensuring confidence and quality in the market. Those carbon markets that may have earned carbon credits before registration stand a fair chance of being transformed into the unorganized carbon market. These credits are normally verified by third-party accredited bodies against the voluntary carbon standard 2007. However, “Regulated markets like CDM and EU ETS are set up by governments or the United Nations and include registry trading, which allows only regulated credits, so the registries associated with regulated markets would not allow trading of voluntary credits. “Voluntary markets need registries to track trades to eliminate double trading and also to allow forward trades. Voluntary markets must develop their own registries both because their voluntary carbon units can not be traded on the regulated market registry platform and for credibility and transparency,” according to Dr. Anne-Marie. “So far the voluntary carbon market has been characterized by being restricted to trading only occurring between buyers of emission units and sellers who are the projects or organizations whose activities have generated an emission reduction (there are no options, forward trades, etc., as occurs in other energy markets). The main reason for this is a lack of a formal register to track trades,” she adds. Given the Bali road map, both the regulated market (EU ETS, CDM and JI) as well as the voluntary market will grow between now and 2012. However, the voluntary market growth expectation according to studies by LRQA stresses upon the growing desire of organizations to demonstrate their CSR/sustainable credentials by going carbon neutral, which requires a combination of in-house reductions -- and final offsetting of those emissions that can not be reduced. For such organizations the voluntary markets offer an opportunity to manage their offset in a credible manner. Organizations’ emissions in this case are not subject to a regulated constraint such as EU ETS; Finally, the developing markets in USA where there are no regulated markets and where the voluntary market is the way to manage carbon portfolios. The voluntary market is not going to grow to the size of the regulated market, but it will become an important part of the market mechanisms that reduce emissions in the coming days.

ET Art Index

This is the art index created by Osian and Economic Times. Highly questionable but a good repository of some leading contemporary Indian artists. I am sure ET will come out with new indices for the art market - art large cap, art small cap, Deccan art index ;)


Close on the heels of the success of the equity indices, which ET had launched in recent years, ET now unveils its next generation index called the ET Art Index powered by Osian’s – Connoisseurs of Art, the world’s premier Archive on the Indian contemporary fine and popular arts. This index was developed keeping in mind the growing interest in Indian contemporary art across the globe and the need to track its performance vis-à-vis other asset classes like equities, gold and real estate.
The ET Art Index could become an ideal benchmark not only for the fund managers and insurance companies, but also for investors including High Net worth Individuals (HNIs). With increased interest in Indian art and new art funds slated to be launched in the country, the need for a quantitative evaluation of the movement of art prices is now imperative.In order to develop this index, ET and Osian’s have used the transactions of artworks belonging to India’s leading 51 contemporary artists. The transaction value of these 51 artists comprise 88% of the total organized Indian art market in the year 2005 while it was over 91% in the year 1997. Some of the prominent artists included in the art index are Jamini Roy, A.R. Chughtai, M.F. Husain, F.N..Souza, Tyeb Mehta, V.S. Gaitonde, Akbar Padamsee, Ganesh Pyne, J. Swaminathan, J. Sultan Ali, Bhupen Khakhar and the three Tagores - Abanindranath, Rabindranath and Gaganendranath.

ET Art Index is calculated on the basis of the average Square Inch Rate (S.I.R) of works of art of these top artists. Since works of artists are in different media and dimensions, the S.I.R is the appropriate basic unit so as to measure and compare the values of art fairly.

This is calculated by dividing the sale value by the area/volume of the artwork.
The Liquidity and Historical Significance weights have been considered so as to arrive at the final index values. The historical weight for each artist have been given on the basis of a range of criteria such as originality, critical acclaim, exhibition and publication history, collector profile, sales record. However the liquidity weights are given purely based on the total traded value of each artist for the calendar year.

The year 1997 has been taken as the base year for the purpose of calculating the base values. This year was a turning point in the history of the Indian Contemporary Art, according to experts, in which, among other issues, the first professional auction was held by an Indian organisation, HEART. The base value has been converted into 100 to obtain the index figures.

On a Compounded Annualized Growth (CAGR) basis, ET Art Index gave a return of 47.8% since it’s inception in Jan 01, 1998. From a level of 100 on Dec 31, 1997 the index value stood at 2513.1 on March 22, 2006. During the same period, BSE Sensex gave a return of 14% on a CAGR basis. The significant movement of the ET Art Index started in the year 2003, which was also the beginning of the boom period for the Indian equity market.

Artists in ET Art Index

Ali, J. Sultan

Ara, K.H.

Baij, Ramkinkar

Barwe, Prabhakar

Bawa, Manjit

Bendre, N.S.

Bhattacharjee, Bikash

Biswas, Nikhil

Bose, Nandalal

Broota, Rameshwar

Buksh, Ustad Allah

Burman, Sakti

Chandra, Avinash

Chittaprosad

Chowdhury, Jogen

Chughtai, Abdur Rehman

De, Biren

Dhurandhar, M.V.

Dodiya, Atul

Gaitonde, V.S.

Goud, Laxma

Gujral, Satish

Hebbar, K.K.

Husain, Maqbool Fida

Keyt, George

Khakhar, Bhupen

Khanna, Krishen

Mazumdar, Chittrovan

Mazumdar, Hemendrana

Mehta, Tyeb

Menon, Anjolie Ela

Mookherjea, Sailoz

Padamsee, Akbar

Patwardhan, Sudhir

Pyne, Ganesh

Ramachandran, A.

Ram Kumar

Raza, S.H.

Rodwittiya, Rekha

Roy, Jamini

Sabavala, Jehangir

Sen, Paritosh

Shreshtha, Laxman

Singh, Arpita

Souza, Francis Newton

Subramanyan, K.G.

Swaminathan, Jagdish

Tagore, Abanindranath

Tagore, Gaganendranath

Tagore, Rabindranath

Varma, Raja Ravi