Black, No

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. In this entire bargain, where does
India come into the picture? 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.

Reportedly last year, many Indian domestic firms (comprising public and
private) held back over 90% 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 them in recent times the price for carbon credit has gone down considerably
due to the recession linked production cuts in developed nations and less
dependency on coal due to relatively lower oil prices. 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, as India has
cleared a large number of such 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.
Describing the scenario in India, Hari Kishan Burle, general manager, business
technology services, Wipro Technologies says, "India has generated approximately
30 mn carbon credits and approximately 140 mn in run, the second highest
transacted volumes in the world. Indias 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 Ministers
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
Indias 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, adds, "Carbon
credit trading is relatively a new concept in the market. Indian companies are
only gradually waking up to it. Right now, there is a lack of expertise in
leveraging this concept to reduce carbon emissions. But 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. Forward
transactions in carbon credits are now moving at a slower pace than ever. 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." says Kishore Butani, founder, carbonyatra.com.

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	Post Copenhagen there is hope that Japan and Australia will be the next buyer destinations for Indian carbon credits Kishore Butani, founder, carbonyatra.com

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 adds, "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 explains, "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 5% 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% 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 and also to showcase themselves as socially responsible
entities to their clients.

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. On the IT front, companies like Logica, Dell, Wipro, etc,
have been striving to make a difference. The Carbon Disclosure Projects (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 says, "In India alone, we have already achieved a
remarkable 11.3% reduction in our carbon footprint, and have set an ambitious
yet achievable target of 10% 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.

Meanwhile, 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% 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.

Incidentally, even Bollywood beauty, Aishwarya Rai Bachchan has invested in
carbon reduction projects such as wind mills in Rajasthan and is looking to earn
voluntary non-CDM carbon credits, which are to be sold to polluter companies
internationally. On a final note, Butani raises a strong point by saying,
"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

shilpas@cybermedia.co.in