22.10        ndian    onom
     The ratio indicates how efficient new investment          comparison of greenhouse gases with each other in
     contributes to the growth of an economy.                  the context of the relative potential to contribute
          A capital-output ratio of 3:1 is better to the       to global warming. For trading purposes, one
     4:1 as the former needs only three units extra            credit is considered equivalent to one tonne of
     capital to produce one extra output in comparison         CO2 emission reduced.
     to the latter which needs four units for each extra
     unit output.                                                 cArry trADe
                                                               Borrowing in one currency and investing in
        cArbon creDit
                                                               another is termed as carry trade. In recent times
     Amidst growing concern and increasing awareness           (upto November 2007) trillions of dollars have
     on the need for pollution control, the concept            been borrowed in low-cost ‘yen’ for deployment
     of carbon credit came into vogue as part of an            across money markets, stock markets, and even
     international agreement, known popularly as the           real estate markets across the globe and a part of
     Kyoto Protocol. Carbon credits are certificates           the money flowed into India, too.
     issued to countries that reduce their emission of
     GHG (greenhouse gases) which leads to global                 cAsh cow
     warming. It is estimated that 60–70 per cent of
     the GHG emission is through fuel combustion in            A profitable business or firm (may belong to either
     industries like cement, steel, textiles, and fertilisers. public or private sector) which gives regular cash
     Some GHGs like hydro fluorocarbons, methane,              flow to the owner (this happens either due to
     and nitrous oxide are released as byproducts of           regular demand of the popular goods produced by
     certain industrial process which adversely affect         the firm or the compulsions of the consumer to
     the ozone layer, leading to global warming.               buy the products). As for example, the antiseptic
          The concept of carbon credit trading seeks           lotion ‘Dettol’ is a cash cow for Reckitt and
     to encourage countries to reduce their GHG                Colman in the private sector and LPG is a cash cow
     emissions, as it rewards those countries which meet       for the manufacturing and marketing government
     their targets and provides financial incentives to        companies (provided there is no subsidy on LPG).
     the others to do so as quickly as possible. Surplus
     credits (collected by overshooting the emission              cAveAt emptor
     reducing target) can be sold in the global market.        A Latin phrase which means ‘let the buyer beware’.
     One credit is equivalent to one tonne of CO2              Simply put, it means that the supplier has no legal
     emission reduced. Carbon Credit (CC) is available         obligation to inform buyers about any defects in
     for companies engaged in developing renewable             his goods or services; the onus is on the buyer to
     energy projects that offset the use of fossil fields.
                                                               himself determine the level of satisfaction out of
          The trading of CC takes place on two stock           the products.
     exchanges, the Chicago Climate Exchange and the
     European Climate Exchange. CC trading can also               ceteris pAribus
     take place in the open market as well. European
     countries and Japan are the major buyers of carbon        A Latin phrase which means ‘other things being
     credit. Under the Kyoto Protocol, global warming          equal’. The phrase is used by economists to cover
     potential (GWP) was an index that allowed for the         their forecastings.