The Hindu Business Line : Volatility in carbon trading unlikely to affect India: Expert

The National Allocation Plan-2 (2008-12), particularly the concrete targets to be fixed for emission reductions as established in the Kyoto Protocol, will be extremely critical to the global carbon credits market, say experts.

Dr P. Ram Babu, Associate Director of PricewaterhouseCoopers, told Business Line that the targets were too liberal in NAP-1, which perhaps may have led to the surplus scenario. (Too much supply of carbon credits, with virtually zero demand.)

Next Conference

According to him, the determination of the national allocation numbers by the EU ETS (Emissions Trading System) prior to NAP-1 were not facility-based but sector-based. He felt the targets for NAP-2, to be decided at the next Conference of Parties to the Kyoto Protocol sometime this year, may be much tighter.

Stressing the need for long-term players, he said the CDM projects in non-Annexe countries such as India were unlikely to be disturbed by the recent volatility in the global carbon credits trading market, which witnessed a nosedive in rates recently. It is learnt that rates have now stabilised and are hovering around the € 18.33 level. As per available data, India has now approved as many as 297 CDM projects.

Kyoto mechanisms

He said reduction targets could be met by reducing domestic GHG emissions, more by utilising the three flexible mechanisms allowed under the Kyoto Protocol — Emissions Trading, Joint Implementation and the Clean Development Mechanism.

The EC is expected to base the Phase 2 caps on 2005 data. It is learnt that it would take the 2005 emissions data when policing the caps on emissions in the second phase of the EU ETS

Certified Emission Reductions (CERs) accruing from CDM projects can be used for compliance by installations covered by the EU ETS as of January 1, 2005.