Essar Oil to sell Rs 10-cr carbon credits a year

AHMEDABAD: Essar Oil has become the next big corporate house after Reliance Industries to have tapped the Kyoto Protocol’s Clean Development Mechanism (CDM) for getting carbon credits.

Essar Oil has got its first project registered under the CDM and it will be able to sell 1,35,778 certified emission reductions (CERs) per annum, which would fetch it an estimated Rs 10 crore per annum at current prices. Over a ten-year-period it would generate additional revenues of about Rs 100 crore for the company.

An Essar Oil spokesperson confirmed the development and said some more projects are also targeting the CDM. But, regarding the value, he said it was difficult to estimate as of now, as the global prices keep changing.

Currently, the CERs, which are traded in the global markets, are priced at about $14 per CER, as against over $20 over a year back. Essar is going to sell most of its CERs to companies in Europe and Japan as the US has still not signed the Kyoto Protocol agreement.

Essar Oil’s project aims to reduce GHG emissions by optimising steam utilisation in the vacuum distillation column of the vacuum distillation unit (VDU) in Essar’s petroleum refinery. This will be done through the installation of an energy efficient vacuum creating system. This system will result in lower energy consumption vis a vis the steam jet ejector system which is traditionally used for generating vacuum in the vacuum distillation column.

Two companies based in Gujarat, Gujarat Flurochemicals and Navin Fluorine International, have bagged the largest CDM deals in the country so far, which run into several hundred crore. India has emerged as one of the biggest players in this new green bucks business with over 200 projects registered with the CDM.

Under the clean development mechanism countries can in part meet their own emission reduction obligations by purchasing (CERs) arising from such projects undertaken in developing nations. The executive board of the UN Framework Convention on Climate Change (UNFCCC) carries out the certification process.