The Hindu Business Line : Domestic cos test online auction for carbon credits

Within various CER (certified emission reduction) selling countries under CDM (clean development mechanism), Indian firms appear to be active in trying out the online medium compared to their peers from Brazil, Sri Lanka and Vietnam.

This is evident from the data available from Asia Carbon Exchange (ACX), the only firm that conducts online auctions of CERs from CDM projects.

Moreover, for forthcoming auctions, ACX is in talks with various Indian companies and expects participation from about ten projects. Companies that want to list their projects for selling CERs can participate free-of-cost. But if they eventually sell their credits through a transaction, they have to shell out a certain percentage of their carbon credit revenues to ACX.

Buyers' participation

The number of buyers who have actively participated and bid for projects has increased from 11 in the first auction held in November 2005 to 17 in April 2006. The exchange has seen a steady increase from France, Germany, Switzerland, Lithuania and especially from the Netherlands, said Mr K. Umamaheswaran, Manager, CDM & Carbon Trading, Asia Carbon Emission Management India.

All the above auctions were held by ACX in a tie-up with New Values, a subsidiary of Rabobank. ACX was to bring sellers on board while New Values was to bring buyers on board, as per the tie up. But the tie up has discontinued now and ACX conducted its first independent auction on August 24. "In the August 24 auction, we concentrated on Vietnam. We had four buyers," he said, adding that ACX is adding more buyers from Japan now.

On the sellers' side, the CDM projects that traded CERs at the ACX have been of Indian, Sri Lankan, Vietnamese and Brazilian origin, although Chinese and Korean sellers are expected to join in for the subsequent auctions. But Indian sellers have dominated the auction.

While 9 out of 12 projects up for sale in the online auction of November 2005 were Indian, 11 out of 13 sellers in December 2005 were Indian, and in January 2006, all ten projects that were up for sale were of Indian origin. However, the next two auctions of February and April this year saw a sharp drop in the number of projects up or sale. "This was driven by the relatively lower number of new registered projects and the carbon credit market crash as well," said Mr Umamaheswaran.

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