With the Gujarat government recently signing a memorandum of understanding with the World Bank for carbon credits, the state is all set to witness a major leap in carbon emission controls and trade in carbon credits.

Gujarat is the first state in India to sign such an MoU with the World Bank. Under this agreement, Gujarat is planning to launch a campaign to reduce carbon emissions from the state.

Emissions from industries and steps like safe handling of solid wastes will also be taken under this campaign.

In return, the World Bank will provide financial incentives to the state. The recent agreement with the World Bank will go a long way in ensuring that the new industries, which will open shops in the state abide by the global pollution standards.

However, the new trend is going to trigger another trade in the enterprising state of Gujarat. Till now carbon credit trade was limited to a very few industries in the state. With the government's plan to launch a campaign for carbon emission control, this trade is bound to get a boost now.

Coming handy in this regard is a carbon credit exchange in China. The Dragon land will set up Asia's first carbon credit exchange and 12 brokerages to let companies invest in clean technology to reduce emissions.

The Beijing-based exchange and the brokers in western China - estimated to cost US $1.7 million over three years - will be formed with financial support by Arcelor Mittal. The UN will certify the credits and aims to get the system ready in 2007 itself.

Carbon trading is a system by which countries or individual companies can trade in greenhouse gas emission targets to reduce global pollution targets set by environmental treaties such as the Kyoto Protocol and the European Union Emissions Trading System. Those with surplus emission targets sell to those with deficits. Carbon trading is also a way of privatising the public cost of carbon dioxide pollution.

Carbon credit certificates are primarily issued through the Voluntary Carbon Standard regulated by the Climate Group, an independent non-profit body working with business, finance and regional governments. The United Nations also operates a Clean Development Mechanism through which countries can register for carbon credits.

China and India are moving up front in the world's carbon credit trading stakes. According to the Environment and Forestry Ministry in India, companies in the country have already earned $7.9 million through carbon credit trading. Ecosecurities, a pioneer of carbon credit projects that is listed on the London Stock Exchange, opened shop in India in 2006 and announced that the Indian market was worth $40 million to $50 million annually.

Environmental groups such as Friends of the Earth are raising concerns about the legitimacy of carbon credit practices and verification problems in the credit certification process. Other groups have accused factories in China of using carbon credit trading to create a loophole in the Kyoto Protocol.

However, several countries accuse India of being a stark example of vested interests pushing for the widespread use of pollution generating equipment such as incinerators so that it can cash in on carbon trading.

The CDM under the Kyoto Protocol lets wealthier nations trade their emission reduction commitments with developing countries by buying carbon credits earned by the latter for projects reducing greenhouse gas emission. Since the CDM began in 2005, India has registered more than 450 projects for carbon trading.

In another development, the UK government has proposed carbon credit cards for individuals to make consumers accountable for the energy they use.

Organisations such as Germany-based Atmosfair and the UK's Climate Care offer online emissions calculators with which air travelers can figure out how much carbon dioxide emission they have caused during their flight. They can then compensate for it through donations to environment friendly projects worldwide.

One such beneficiary of air travel carbon offsetting is the community kitchen for pilgrims in Sringeri Mutt in Karnataka, where the diesel engines earlier used for cooking have been replaced by a solar energy cooking system. About 4,000 tonnes of carbon dioxide will be saved by 2012, according to Atmosfair.