CARBON CREDIT

Carbon credit thrust for cleaner technologies

THE HINDU, Thursday, May 06, 2004
Trading carbon credits between developing and developed nations will soon become a reality.
Companies in India will gain monetarily and be able to put up projects that are eco-friendly.
COME GLOBALISATION, and trade takes on different hues. The latest comes from quite
unconventional quarters trading of carbon credits or more specifically carbon dioxide credits
between developing and developed nations. When global warming is the watchword and reducing
carbon dioxide emission is the buzzword, can trade be far behind?
This becomes particularly relevant when CO{-2} emissions from developed countries are way
beyond those from the developing countries. Add to this the compulsion faced by developed
countries to reduce emissions by 2008-2012. The catch however is the cost developed countries
have to spend nearly $300-500 for every tonne reduction in CO{-2} emission. Contrast this with
$10-25 to be spent by the developing countries. The stage is thus set for trade to flourish. Trading
carbon credits is hence seen as a less expensive option. Yet, there is a limit to which developed
nations can buy credits.
The United Nations Framework Convention on Climate Change's Clean Development Mechanism
(CDM) has been put in place to facilitate the trade of carbon credits between the developing and
developed nations. Till date CDM held little significance, as there was no accrediting body recognised
by the United Nations. Not any more.
In March this year, Det Norske Veritas (DNV) of Oslo, Norway, well known in the field of ISO
certification was accredited by the UN to act as a validating body. The first organisation to get the
accreditation, DNV has already lapped a few projects around the world. In India, DNV is in the
process of validating 9-10 projects.
What does a company in a developing country gain by trading carbon credits? Monetary gain is of
course the first and foremost. Every tonne of CO{-2} not emitted is considered as one credit and
every carbon credit fetches the company $3-6. The remuneration continues year after year. And the
best part is that it is quite easy to implement technologies known to reduce emissions provided the
project meets certain criteria.
"The most important criterion is for the project proponent to prove that it is `not business as usual'
and is a sustainable project," said C. Kumaraswamy, Station Manager & Registered Lead Auditor at
DNV, Bangalore. For instance, it is considered business as usual if it is a binding requirement (on the
company) to change the fuel or technology. Thus the change over by the Delhi buses to CNG will not
fall under the "is not business as usual" clause.
"Only those getting overseas assistance to implement the project will be allowed to trade credits.
Again, the government has to first approve the project before the project is validated and a
developed country should be ready to buy the credit," explained Mr. Kumaraswamy. "Even projects
implemented after 2000 can engage in carbon credit trading and small companies using similar
technology can come together to claim credits and trade them."
The companies trading credits have two options to choose from depending on the life of the project
fixed crediting period of ten years or first period of seven years extendable twice for a total
period of 21 years.

Mr. Kumaraswamy feels that India, like China has a big potential to trade credits. According to him
even projects like biomass gasifiers are seen as sustainable. Despite emitting CO{-2}, it is seen as
a zero CO{-2} emitter. Similarly, solid waste management projects are sure credit earners.
"Someone collecting the waste and converting the methane to power can claim carbon credits," Mr.
Kumaraswamy explained.
Another advantage of implanting cleaner and sustainable technologies is the ability to avail funding
from Prototype carbon Fund which is under the aegis of the World Bank. The fund is formed by
contributions from many developed nations. The only catch being that the carbon credit trading will
be at a discounted price.
With the European Union Emission Trading Scheme about to be passed any time by the European
Union, the Clean Development Mechanism is here to stay. And Indian companies may well take the
lead to use cleaner technologies to earn credits and secure funds.

India gets 43% Of Carbon Credits

31 Jul, 2007, The Economic Times
NEW DELHI: India may be the leader in the number of carbon credits issued so far and the
number of clean development (CDM) projects registered with international CDM body, but it
already lags behind China in the volume of average annual credits expected till 2012.
India has cornered nearly 43% of the carbon credits (CERS) issued so far by the CDM executive
board, the highest international body under the Kyoto Protocol to register projects and issue
credits. In comparison, only 17% of the CERs has been issued to China. But the expected
average annual CERs from registered projects till 2012 has China (44%) far ahead of India
(15%), although India, with 259 projects, leads China (101) in the number of registered projects.
Carbon credits, or CERs (carbon emission reductions), are tradable credits earned for
investing in projects aimed at reducing greenhouse gas emissions.
One CER is equivalent to one tonne of carbon dioxide reduced. Under the Kyoto Protocol,
governments and companies in the European Union can use these credits to offset their carbon
emissions and meet part of their reduction targets. Carbon credits are generated mainly in the
developing countries because of the lower project cost.
Chinas leadership can be explained by both the size of its industries as well as the kind of
projects it has taken up. The sheer scale of Chinese industries reflects in the size of their CDM
projects also, says PWCs CDM consultant Prashant Vikram Singh.
Indian companies have mainly concentrated on renewable energy (biomass, wind power, etc.) or
waste heat recovery projects that generate much less CERs compared with the Chinese who
have several projects in high CER-yielding HFC23 projects, says Navin Fluorine International
MD Vinesh Sadekar.
Navin Fluorine has got one HFC23 project registered last March and is expecting an average 2.8
million CERs per annum. A few other Indian companies have also earned credits for their HFC23
projects, but the projects have been too few compared to China.

Each tonne of HFC23, a by-product of the refrigerant gases production process, is

equivalent to 11,700 tonnes of carbon dioxide. Naturally, destroying small quantity of HFC23
can fetch a very large volume of CERs. Also, these projects attract more investments since they
are relatively cheap to execute and earn more credit.

Over 200 Indian cos apply for CDM in race for carbon credit
The Financial Express Tuesday , March 27, 2007 at 0135 hrs IST

Ahmedabad, Mar 26 India seems to have emerged as the dark horse in the race for green bucks
as more than 200 Indian entities have applied for registering their Clean Development
Mechanism (CDM) Project under Kyoto Protocol for availing carbon credits. Out of the total
CDM projects for registration under Kyoto Protocol across globe, 32.86% projects are from
India, followed by Brazil with 17.12%.
Dr Ram Babu, managing director-India, CantorCO2 India Pvt Ltd, a leading global provider of
financial services to the worlds environmental and energy markets, said, Unless you have clean
energy, you would be faced with the threat of losing your competitiveness.
More than 1,000 companies have applied for registering their CDM projects under Kyoto Protocol
across the globe for availing CERs (Certified Emission Reductions). He also pointed out that of
the total CDM projects applied for registration, 200 entities are from India, which roughly works
out to be 32.86%, followed by Brazil with 17.12%, China 7.59% and Republic of Korea 1.95%,
while other countries collectively account for 19%. Elaborating on carbon credits, he said, any
company, which reduces carbon dioxide emissions, are entitled for carbon credits, which can be
sold in the market. Currently, the rate of one carbon credit is 13 euro. Indian entities can
have higher incomes more from carbon credits than their core business, he claimed.
According to Jotdeep Singh, Head Renewables and Carbon Credit, RaboBank India Finance Ltd,
The carbon credit market was $25 billion last year and It is growing at tremendous space. Not
only that, there is a demand to reduce 1 billion tonne of carbon emissions in the world, so that
threats like global warming could be mitigated.
If India meets one fifth of carbon emission reduction demand, it works out to be 200 million tonne
of carbon emission reduction. With this the Indian entities can earn 2 billion euro by the year
2012.
Gujarat has also remained a leader in registering CDM projects as Gujarat Flourochemicals Ltd
(GFL) was among the early birds to register CDM project.