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The Carbon Story

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DQC News Bureau
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According to a report released by ABI Research, global carbon emissions

trading market will reach $395 bn in 2014, more than three times the $118 bn

mark in allowances traded in 2008. The market research firm further projects

that $14.6 bn will be invested in seventy-three new carbon capture and

sequestration (CCS) projects that will prevent 146 mn tonnes of CO2 from

polluting the environment from 2009 to 2014. Although, India is the second

largest generator of environment friendly projects for carbon emission

reduction, Indian companies still occupy the backseat when it comes to

generating benefits through trade.

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Reportedly last year, many Indian domestic firms (comprising public and

private) held back over 90 percent of carbon credits, as there were clouds of

uncertainty looming large over the global carbon market. Experts believe that

the hesitation shown by Indian companies to engage in forward transactions or

sell their entire carbon credits in global carbon trading markets has made them

more vulnerable to price fluctuations. They are further of the opinion that it

is difficult to predict the impact of holding back CER transactions. According

to researchers, Indian companies are expected to invest $30 bn in around 1,470

projects to generate 610 mn Certified Emission Reduction (CER) applications.

It can be recounted that only eight Indian projects have entered transaction

contracts with foreign trading partners to sell carbon credits, which will be

generated in the future. These firms received a clearance for carbon credits

from an international committee set up under United Nations Framework Convention

on Climate Change. The current trading mechanism will continue till 2012.

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Describing the scenario in India, Hari Kishan Burle, GM-Business Technology

Services, Wipro Technologies said, "India has generated approximately 30 mn

carbon credits and approximately 140 mn in run, the second highest transacted

volumes in the world. India's carbon market is growing faster than even IT,

bio-technology and the BPO sectors as 850 projects with a huge investment of Rs

650,000 mn are in the pipeline. As per the Prime Minister's Council on Climate

Change, the revenue from 200 projects is estimated at Rs 97 bn till 2012.

Carbon, like any other commodity, has begun to be traded on India's

multi-commodity exchange and has become the first exchange in Asia to trade

carbon credits. As the deadline for meeting the Kyoto Protocol targets draws

nearer, prices can be expected to rise, as countries/companies save carbon

credits to meet strict targets in the future."

Diptarup Chakraborti, Principal Research Analyst, Gartner, added, "Carbon

credit trading is relatively a new concept in the market. Indian companies are

only gradually waking up to it. There will be a marked change in the coming

years."

A Quick Dossier



The carbon market is divided into two parts, namely one which is compliance

driven and the other being the voluntary market. The more dominant and lucrative

compliance market only accepts carbon credits under the CDM program, while there

are various regional non-UN administered voluntary programs worldwide. "Post

Copenhagen, the Climategate scandal and absence of support from the US through a

climate policy; the mood in the compliance carbon market is grim. Carbon credits

issued under the CDM from registered Indian projects are now selling at Euro 10

per credit, down from Euro 18 two years ago. But on the flip side, the slowdown

in the development of CDM projects from India would mean a shorter supply of

carbon credits post 2012, and this in turn could potentially raise the prices

further. This is the scenario raising optimism among carbon traders worldwide."

said Kishore Butani, founder, carbonyatra.com.

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India is still the second biggest carbon credits supplier after China in the

market and even the government is leaving no stone unturned in this direction.

To explain this, Butani further added, "The Indian government is betting heavily

on renewable energy and so it is being witnessed that many private players are

investing in wind and solar energy in India. By default, such projects would

also earn carbon credits if they play their cards right. So, while Indian carbon

projects were expecting to sell carbon credits to the US market, post Copenhagen

and the lack of a clear policy by the Obama administration, there is hope that

Japan and Australia will be the next buyer destinations for Indian carbon

credits."

He further explained, "The Indian government seems to be serious about its

low carbon energy future and going by the current trends in the renewable energy

play, it can be expected that India Inc would invest heavily in wind and solar

projects. With the new five percent renewable energy quota, there is a fear

among companies that the government will force private fossil fuel power

generators to showcase some sort of investment in renewable energy in their

portfolio."

Green IT Footprint



A lot of IT and BPO companies in India have shown interest in carbon trade

as they emit a huge amount of carbon due to large scale use of hardware.

According to a Gartner Group 2007 study, PCs and monitors are responsible for 40

percent of IT related CO2 emissions. Apart from the factor of corporate social

responsibility in reducing carbon emissions, vendors mainly step in the race

owing to peer pressure.

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In India,

we have already achieved a remarkable 11.3% reduction in our carbon

footprint, and have set a target of 10% for the next year

Abhay Gupte, CEO, Logica India

Finer Nuances



Reliance Industries, The Birla Group, DLF, ONGC, SRF, GFCL are some of the

larger companies while many spinning mills in South India are part of the carbon

trading initiative. Cmpanies like Logica, Dell, Wipro, etc, have been striving

to make a difference. The Carbon Disclosure Project's (CDP) Global 500 report,

which provides the most comprehensive assessment of global data on corporate

greenhouse gas emissions and climate change strategies, rated Logica top of the

FTSE 350 for IT services. Commenting on the achievement, Abhay Gupte, CEO,

Logica India said, "In India alone, we have already achieved a remarkable 11.3

percent reduction in our carbon footprint, and have set an ambitious yet

achievable target of 10 percent for the next year. We look forward to further

reduce and challenge the environmental impact of our internal processes,

products and solutions offered to customers." The emission monitoring solution,

'EMO' developed by Logica, was recognized by The Economist as one of the ten

game-changing solutions to combat climate change.

Dell is saving more than $1.8 mn and avoiding nearly 11,000 tonnes of CO2

emissions annually through a global power management initiative. Dell is

transitioning all of its new laptop displays to LED 15-inch displays that

consume an average of 43 percent less power but offer maximum brightness. This

is expected to result in cost and carbon savings of approximately $20 mn and 220

mn kWh in 2010 and 2011 combined, the equivalent of annual CO2 emissions

resulting from energy use in more than 10,000 homes.

On a final note, Butani said, "Instead of just switching off lights for an

hour each year or holding concerts to raise climate change awareness, it makes

more sense to invest in a wind mill, which produces clean power, which in turn

supplies power to the state grids for the next twenty-five years and also earns

carbon credits."

Shilpa Shanbhag



Courtesy: DQ

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