Cement, Energy and Environment

Such a target will translate INDIA'S GROWING CARBON into a 34 per cent cut in EU ETS OFFSET MARKET emissions from 2005 levels by 1 2020 - much greater than the existing target of 21 per cent The offsets, called Certified Emissions Redu9tions '-(CERs), are issued under the UN's Clean reduction." The existing accord to reduce carbon emissions is up for review in 2012, beyond which it is uncertain. The last global conference on the subject, at Copenhagen, was not able to provide any clarity on the post- 2012 period. Said Jaldeep Sodhi, vice president, Avalon Consulting: 'There is some amount of uncertainty about the future of the climate accord. As a result, some projects in India aimed at generating carbon credits are in limbo." However, Indian companies are optimistic that even if there is no formal accord, post 2012, "some voluntary reduction will be in place. India and China, both favour such voluntary emission reduction targets," said Seshagiri Rao, joint MD and group CFO, JSW Steel. The company generates seven million CERs every year. "We have followed a policy to sell credits as and when generated. We have sold CERs at 15 and even at 10," Rao said. Deutsche Bank's commodity report is bullish on CER prices. Based on projection of higher demand for credit required, it said European em1ss1on allowance prices could go up to 25 in the next two years. Some replacement demand for CERs could also result in higher prices, it said. Courtesy: The Business Standard, July 8, 2010, P6. ·Development M~chanism (CDM), which is designed to reward investors in clean projects in developing nations. CERs are Internationally Tradable and Major Buyers are Big European Polluters, Which can use the offsets to meet mandatory emissions reductions under the EU's emissions trading scheme. Some details about India's carbon market: size and value • • • Of the 421 million CERs issued till date by the UN body governing the COM scheme, India has received 79 million and China 207 million. Of these, an estimated 1 0 million CERs issued to Indian projects remain unsold, analysts say. The COM market was worth $2.7 billion in 2009, comprising part of a global carbon market totalling $144 billion that year. The market is dominated by the EU's emissions trading scheme. • CERs trade at around 13 euros each. Number of projects and project types • A total of 513 Indian COM projects have been formally registered by the UN governing panel. Nearly 800 more are in the development pipeline, either proposed or awaiting auditing before being registered and then issued with CERs after a final round of verification. • China has 873 projects registered out of a total project pipeline of more than 2,100. • In total, there are more than 5,000 projects in the CDM pipeline. Of these, 2,253 have been registered. • As of the beginning of June , India's developed or planned projects: Wind power 380 (6,020 MW total capacity) Biomass: 303 Energy efficiency: 251 Hydro: 144 (6,352 MW planned) Destruction of hydrofluorocarbon HFC- 23:8 • Of the more than 220 registered Indian projects to have received CERs, four are HFC-23 projects and these are responsible for about 50 million of the 79 million CERs issued to date. • HFC-23 is an industrial byproduct and a powerful greenhouse gas. Europe is a top buyer of HFC-23 offsets, although severe criticism of these projects means investors are looking to develop more renewable energy resources instead. India versus China • India allows unilateral development of COM projects. That is, private investors or large firms take on all the costs and risks of designing, developing and verifying a project to ensure it meets UN's rules to be registered an earn CERs • In return, project owners have much greater flexibility in choosing when and what price to sell their CERs. 44 I A (