Gujarat companies board the carbon credit bandwagon

AHMEDABAD: Growing industrialisation in India and particularly in Gujarat has thrown up opportunities in the carbon credit business. Corporates in the region could use these opportunities to generate revenues. According to a top official of the Chicago Climate Exchange (CCX), India will “move quickly” in the future to capture a large part of the carbon credit market.

“India's future is significant. India continues to grow its economy at an impressive rate and one expects its CO2 emission to increase rapidly. At the same time, there is a tremendous recognition among Indian corporates on the need for environmentally sustainable growth. Trading experience at platform such as CCX and first mover advantage will be attractive to many Indian corporates,” said Richard L Sandor, chairman and CEO, CCX.

In order to tap the Indian market, CCX is currently in talks with few corporates and not-for-profit organisations to identify projects, also in the rural sector, which could produce carbon credits or VERs tradable on CCX. Sandor hopes that the volume of carbon credits traded on CCX will increase substantially once corporates from India participate actively. The total volume of carbon credits traded on CCX in ’05 was 1.45 mt, which grew to 7 mt in the first six months of this year itself.

“Significant amount of CDM will be produced in India. Some of the credits can be hedged in European market and sold when the prices are good. Indian corporate can join as liquidity provider on CCX and have option to buy credits in the US, Brazil and China. Companies with subsidiaries in these countries can buy or sell credits on the respective exchanges,” said Mr Sandor.

In India alone, over 227 projects have received the host country approval and almost 90 of them have been registered with the UN body, UNFCCC, a parallel body which registers projects helping in reducing emission of green house gases. Of these over 10% projects are from Gujarat alone.

“Apart from Teri, we are looking at starting our own trading platform in collaboration with Multi Commodity Exchange in India. However, we are awaiting enabling regulations to trade on property emission rights,”
he said.

At Teri, director Preety Bhandari, said that Teri will generate 1.5 mt carbon credit in the next 18 months. “All these projects will be generated at rural level. At an average cost of $4.5 per carbon credit, we hope to generate about Rs 31 crore by selling these credits on CCX,” Ms Bhandari said.