Carbon credit players eye Gujarat

Even as India is being heralded as the next carbon credit destination of the world, with maximum growth in this front happening in Maharashtra, Chhattisgarh and Andhra Pradesh, Gujarat is slowly emerging as the dark horse of the country on the back of rapid industrialisation through its recent oil refineries and power projects.

Between the end of 2005 and December 2006, 450 clean development mechanism (CDM) projects had been submitted to the ministry of environment and forests, of which around 420 CDM projects have received government approval, which make up a total of 350 million carbon credits, said a source from the ministry. Of the 420 projects, around 20 are from Gujarat.

Corporate biggies like Reliance and Essar are already present in the state. And now, most carbon credit consultants, including a few international environment players planning to set up shop in the country, are eyeing the Gujarat market.

Of the approved companies from Gujarat, Torrent Power has the maximum number of credits to its name with 11 million credits followed by ONGC's Hazira refinery with approximately two million credits, Indian Farmers Fertiliser Cooperative Ltd (Iffco) with 1.5 million credits, Essar Power with 0.5 million credits, Reliance Industries' approval for its base in Gujarat close to 2,40,000 credits, and Apollo Tyres with 1,00,000 credits.

Others include United Phosphorus, Gadhia Solar, Tata Chemicals, Rolex Rings, Alembic and Fairdeal Suppliers, said the source.

"Going by the current rates, where carbon credits are measured in units of certified emission reductions (CERs) and each CER is equivalent to one tonne of carbon dioxide reduction, the value of one carbon credit could be anywhere between three Euros and six Euros, and with bank guarantee can go up to eight or nine Euros," said Pranav Nahar, managing director of Eco-securities, which boasts of being the only international developer and trader of carbon credits to have a liaison office in India.

Carbon credit analysts confirm that at least two leading international players have already begun dialogue with the government to acquire permission to set up liaison offices in India.

However, in spite of the global interest in India for the CERs market, there is still some way to go before it catches up with the market leaders in the field. While China leads the pack with a market share of 60 per cent in the carbon credit trading, India lags behind with around 15 per market cent share, said a leading environment analyst.

Compounding to its woes is its high rejection rates from United Nations Framework Convention on Climate Change (UNFCCC)'s Kyoto protocol.

"In spite of being preffered by most companies in the UK, Germany, Japan and Denmark, the reason India is still not counted among the top three carbon credit nations is because of its project rejection rate, which is as high as 50 per cent," said Nahar.

He also added that just because the government approves projects does not mean that validators or the CDM executive board will do so.

"The projects do not get approval mostly due to the consultants hired by Indian companies who if not well versed with the Kyoto protocol will not be able to comply with the strict UNFCCC norms," he added.