What is peculiar about this currency is that unlike paper currency and plastic money, the major stocks of carbon currency lie with the developing countries, which are otherwise ‘poor’. Logic would, therefore lead us to expect that this is an opportunity for developing countries to demand investment and technology from industrialised nations on their terms and conditions. This is exactly what the developing countries were made to believe when CDM was proposed. In anticipation of a huge ‘carbon market’, big and small entrepreneurs jumped on to the business of trading in carbon.

Nearly one year after the Marrakech accords, the CDM market has proved to be a mirage. Prices have fallen dramatically, and there are speculations whether there will be any takers for CDM. "Carbon prices are not standardised, and they differ on project basis. At present, they range between US $1 per tonne of carbon dioxide to US $3 per tonne of carbon dioxide," says Niel Cohn of New York-based Natsource, which provides strategic advisory and brokerage services for environment, natural gas and electricity, as well as coal and weather hedging markets. According to Adriaan Korthuis of the Dutch CERUPT project, the price varies between US $2-US $5 per tonne of carbon dioxide. The present carbon market in Indonesia is as low as

US $1.87 per tonne of carbon dioxide.The key reason for the crash in expectations is the withdrawal of the US from the Kyoto Protocol. The demand for CERs fell dramatically when the world’s biggest polluter withdrew, taking with it almost 70 per cent of the expected trading. "Before the US withdrawal carbon dioxide prices were as high as US $5-10 per tonne of carbon dioxide. After the US withdrawal the prices have crashed down to

US $3-5 per tonne," says Maurits Henkemans from the Dutch ministry of economic affairs.

The availability of hot air has further depressed the market for CERs. "The higher the availability of hot air in the market, lower the demand for emission credits from other sources, including CDM," says Jyoti Parikh of Mumbai-based Indira Gandhi Institute of Development Research. According to Gao Feng, deputy director general of the treaty and law department of China’s foreign ministry and the present head of Chinese delegation, the total aggregate emissions of Annex I countries (industrialised countries) have declined by 5.4 per cent during 1990-2000, which covers the protocol target of 5.2 per cent. Then where is the market? If there is trading, it will be among Annex I countries, such as hot air trading with Russia. Any carbon trading between Annex I countries and developing countries will be a political — not real — market.

Other experts feel the picture is not so gloomy — the 5.4 per cent target is the aggregate target, and industrialised countries still need to meet their individual targets. "I do not think Russia will sell all its hot air to industrialised countries. So, if we do not take into consideration ‘hot air’, industrialised countries have not met their individual targets. These countries will have to use other mechanisms, such as CDM, to meet targets," says Benito Müller of Oxford Institute for Energy Studies.

According to Parikh, some estimates with US participation were as high as high as US $25 per tonne of carbon dioxide. Parikh feels that large developing countries such as India, China and Brazil should put their foot down and set a floor price of us $10 per tonne of carbon dioxide.