The Hindu Business Line : Indian cos see market for carbon credits

Carbon credits are earned by reducing greenhouse gas emissions through innovative technologies. A new market is now emerging for trading in `emission reduction units' (ERUs) with European Union launching its Emission Trading Scheme in January 2005.

Reduction in emission levels, certified by designated agencies, can be traded as a commodity under the United Nation's Framework for Climate Change Convention. Gujarat Fluorochemicals Ltd is said to be the first Indian company to get the approval from the National Designated Authority of UK.

The Union Government has so far approved 30 projects in various States for trading their `carbon credits', according to Mr R.K. Sethi, Director, National Authority for the CDM projects, under the Ministry of Environment.

Addressing a seminar on UK-India climate change business, organised by the British Deputy High Commission, here on Monday, Mr Sethi said the authority approves CDM (Clean Development Mechanism) projects free of cost.

The projects approved include seven in Karnataka, six in UP and two in Andhra Pradesh and one in Maharashtra.

Speaking on the occasion, Ms Margaret Beckett, British Secretary of State for Environment, Food and Rural Affairs, said UK is willing to work with the Indian Government and business on CDM projects and development of low carbon technologies.

The UK companies can assist CDM projects in India by way of technology, consultancy and project finance, she said. Private equity funds such as Actis is willing to invest in CDM projects. Mr Mark Goldsmith, Investment Principal, Actis, said the fund is prepared to invest up to $20 million on a single project.

There are also brokers offering trading service for carbon credit. According to Co2e, a UK-based broker dealing in emission reduction units, closing prices of EURs for delivery between 2005 and 2002 are around $5 to $6 per unit. Payment is made on delivery of certified emission reduction units. There is a demand for large volume from Japan, European countries and Canada.