Relations between Climate Change, Sustainability, Kyoto Protocol, Carbon Trading and Funding of Activities of Small and Medium Enterprises

        Scientists found that the temperature of planet earth is rising and that climate is changing. The cause of the current climate change was attributed to emissions of green house gases by fossil fuels and low energy efficient technologies. Kyoto Protocol tried to come up with few instruments and mechanisms to address the change in climate and to facilitate the development of sustainable low emission technologies in a market dominated by established high emission, low energy efficient technologies. At the protocol, developed countries pledged to reduce their carbon emission to certain levels to address climate change. One of the instruments that was formulated was carbon trading. This is a cap and trade system in which a central body fixes the emission limit of different countries and the member countries are allocated limits or caps to greenhouse gas emission level. These caps are also allocated to corporations and large companies. The companies receive or buy the allocation caps from the central authorities and continue with their operations. If the countries or companies seems to exceed the allocated emission levels, they have few options like trade the emission units among themselves (emission trading), invest in low emission sustainable technologies and projects or cut their present productions and operations. Now, in order to facilitate the investment in low emission technology, the Kyoto protocol came up with few mechanisms, two of which are clean development mechanism (CDM) and landuse, landuse change and forestation (LULUCF). CDM allows a developed country to invest in sustainable low emission projects in developing countries and obtain certified emission reduction (CRM) certificates on successful completion of sustainability projects. These CRM certificates thus allows developed countries to obtain extra emission units and at the same time facilitates transfer and growth of low emission technologies in developing countries. LULUCF also facilitates afforestation and carbon sequestration projects in developing countries and provides emission reduction certificates to developed countries and corporations. It is in the position of facilitating CDM and LULUCF projects and providing emission reduction units that small and medium sized enterprises say XYZ  in developing countries (INDIA) come into play. These SMEs obtain funding through intermediaries like venture capitals, capital investment funds etc. to undertake low emission projects like sustainable energy, technology change etc. In case of XYZ, there are a number of such projects like biomass briquettes, change to solar technology from diesel for salt production, marketing and selling of natural salt, mangrove habitat regeneration, watershed development etc. These activities belong sustainable development  projects and thus receives funding allocated for emission reduction projects from developed countries and corporations. These enterprises generally have good connections with the community and ground level knowledge and thus facilitate sustainable development and technology transfer in developing countries upon receiving the allocated funding and sustainable investment funds from the developed countries and corporations. Upon completion of the sustainable development projects, the enterprises provide the project results and data like area of land-use change etc. to the corporations and countries directly or through intermediaries, who thereby convert them and obtain the emission reduction units.