The Hindu Business Line : IDBI, KfW tie up for carbon credit trading

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New Delhi Jan.19 Eyeing the carbon-trading sector, Industrial Development Bank of India Ltd (IDBI) on Friday tied up with German bank KfW help Indian companies identify projects, fund the projects and help earn carbon credits. The tie-up would also help the companies find a suitable buyer in the international market.

Additionally, IDBI plans to pool smaller volumes of CERs or carbon credits from various Indian projects, aggregate the CERs and sell them in the international market.

In a press release, IDBI said companies planning to undertake clean development mechanism (CDM) projects under the Kyoto protocol can now approach the IDBI-KfW combine for solutions that include project identification, funding implementation of CDM projects, registration and verification, advisory services for trading certified emission reduction (CER) units and CER-buyer.

The tie-up is in the form of a "non-exclusive Memorandum of Understanding with Germany-headquartered KfW Bankengruppe to jointly assist domestic companies undertaking Clean Development Mechanism (CDM) projects which reduce carbon emissions in the environment".

The two financial intermediaries will also help companies realise the value of the carbon credits, arising from the implementation of CDM, by selling them overseas.

IDBI is currently working on some CDM projects in the textiles, steel, power, paper and sugar sectors.

Assisting SMEs

Further, IDBI is seeking to assist small and medium enterprises (SMEs) in implementing CDM projects in a big way. The bank plans to pool CERs generated by SMEs and sell them globally in market lots of 50,000 to 100,000 CER units.

The move to aggregate CERs is significant as international buyers typically require larger volume of CERs.

The MoU was signed by Mr Pradip Roy, Executive Director, IDBI, and Mr Christian Haas, Director KfW Office, New Delhi. Mr V.P. Shetty, CMD, IDBI, stated, "The IDBI - KfW combine will not only assist Indian companies, both large and small, which want to undertake CDM projects, but also help boost their bottom line by selling the resultant CERs forward in the global markets.

While the sale of CERs will give companies additional revenue, IDBI stands to gain in the form of additional fee income."

Mr Haas added, "As a buyer of carbon credits, KfW acts for the benefit of European companies. By cooperating with IDBI, KfW ensures access of its European partners to the buoyant CDM market of India."

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