ANALYZING INDIAN SCENARIO
India being a developing country has no emission targets to be followed. However,
she can enter into CDM projects. As mentioned earlier, industries like cement,
steel, power, textile, fertilizer etc emit green houses gases as an outcome
of burning fossil fuels. Companies investing in Windmill, Bio-gas, Bio-diesel,
and Co-generation are the ones that will generate Carbon Credits for selling
to developed nations. Polluting industries, which are trying to reduce emissions
and in turn earn carbon credits and make money include steel, power generation,
cement, fertilizers, waste disposal units, plantation companies, sugar companies,
chemical plants and municipal corporations.
DELHI METRO RAIL CORPORATION (DMRC):
A must mention project is The Delhi Metro Rail Corporation (DMRC): It has
become the first rail project in the world to earn carbon credits because
of using regenerative braking system in its rolling stock. DMRC has earned
the carbon credits by using regenerative braking system in its trains that
reduces 30% electricity consumption.
Whenever a train applies regenerative braking system, the released kinetic
energy starts a machine known as converter-inverter that acts as an electricity
generator, which supplies electrical energy back to the Over Head Electricity
(OHE) lines. This regenerated electrical energy that is supplied back to the
OHE that is used by other accelerating trains in the same service line. DMRC
can now claim 400,000 CERs for a 10-year crediting period beginning December
2007 when the project was registered by the UNFCCC. This translates to Rs
1.2 crore per year for 10 years. India has the highest number of CDM projects
registered and supplies the second highest number of Certified Emission Reduction
units. Hence, India is already a strong supplier of Carbon Credits and can
improve on it. (Refer Annexure No. 3 & 4 for projects registered and expected
average annual CERs generated respectively)
BENEFITS FOR INDIA
By, switching to Clean Development Mechanism Projects, India has a lot to
gain from Carbon Credits:
a) It will gain in terms of advanced technological improvements and related
foreign investments.
b) It will contribute to the underlying theme of green house gas reduction
by adopting alternative sources of energy
c) Indian companies can make profits by selling the CERs to the developed
countries to meet their emission targets.
TRADING OF CERS:
• As a welcome scenario, India now has two Commodity exchanges trading
in Carbon Credits. This means that Indian Companies can now get a better trading
platform and price for CERs generated.
• Multi Commodity Exchange (MCX), India’s largest commodity exchange,
has launched futures trading in carbon credits. The initiative makes it Asia's
first-ever commodity exchange and among the select few along with the Chicago
Climate Exchange (CCE) and the European Climate Exchange to offer trades in
carbon credits. The Indian exchange also expects its tie-up with CCX which
will enable Indian firms to get better prices for their carbon credits and
better integrate the Indian market with the global markets to foster best
practices in emissions trading.
• On 11th April 2008, National Commodity and Derivatives Exchange (NCDEX)
also has started futures contract in Carbon Trading for delivery in December
2008.
• MCX is the futures exchange. People here are getting price signals
for the carbon for the delivery in next five years. The exchange is only for
Indians and Indian companies. Every year, in the month of December, the contract
expires and at that time people who have bought or sold carbon will have to
give or take delivery. They can fulfill the deal prior to December too, but
most people will wait until December because that is the time to meet the
norms in Europe. If the Indian buyer thinks that the current price is low
for him he will wait before selling his credits. The Indian government has
not fixed any norms nor has it made it compulsory to reduce carbon emissions
to a certain level. So, people who are coming to buy from Indians who are
actually financial investors. They are thinking that if the Europeans are
unable to meet their target of reducing the emission levels by 2009, 2010
or 2012, then the demand for the carbon will increase and then they may make
more money. So investors are willing to buy now to sell later. There is a
huge requirement of carbon credits in Europe before 2012. Only those Indian
companies that meet the UNFCCC norms and take up new technologies will be
entitled to sell carbon credits. There are parameters set and detailed audit
is done before you get the entitlement to sell the credit.
Financing upport in India:
• Carbon Credits projects requires huge capital investment. Realizing
the importance of carbon credits in India,
• The World Bank has entered into an agreement with Infrastructure Development
Finance Company (IDFC), wherein IDFC will handle carbon finance operations
in the country for various carbon finance facilities.
• The agreement initially earmarks a $10-million aid in World Bank-managed
carbon finance to IDFC-financed projects that meet all the required eligibility
and due diligence standards.
• IDBI has set up a dedicated Carbon Credit desk, which provides all
the services in the area of Clean Development Mechanism/Carbon Credit (CDM).
• In order to achieve this objective, IDBI has entered into formal arrangements
with multi-lateral agencies and buyers of carbon credits like IFC, Washington,
KfW, Germany and Sumitomo Corporation, Japan and reputed domestic technical
experts like MITCON.
• HDFC Bank has signed an agreement with Cantor CO2E India Pvt Ltd and
MITCON Consultancy Services Limited (MITCON) for providing carbon credit services.
As part of the agreement, HDFC Bank will work with the two companies on awareness
building, identifying and registering Clean Development Mechanism (CDM) and
facilitating the buy or sell of carbon credits in the global market.
