SAIL, ONGC, Adani Power, Delhi Metro among gainers.
The Indian industry has reasons to cheer the outcome of the just-concluded Durban climate change talks, which announced the extension of the UN carbon market beyond 2012.
Private sector firms as well as public sector units such as SAIL, ONGC and even Delhi Metro, which owns carbon credit, will gain from the extension of the Kyoto Protocol.
An unscheduled 14th day of the Durban talks yesterday saw the announcement on the extension of a second commitment period of Kyoto Protocol. Kyoto, the legally binding climate treaty, allows trading in carbon credits.
This extension indicates a new lease of life for the clean development mechanism (CDM), which allows tradeable credits to companies that set up environmentally-friendly projects. As on last month, India had 2,123 approved CDM projects. Of these, 738 projects were registered with the United Nations Framework Convention on Climate Change.
“The move will definitely help the Indian companies,” says an official from industry chamber FICCI. “Mostly, the ones engaged in energy sectors stand to gain from the extension of the CDM.”
SRF Ltd chairman Arun Bharat Ram, a former CII president, terms as “very welcome measures” the Durban Platform announcement of a second commitment period of the Kyoto Protocol and also the operationalisation of the Green Climate Fund. Under the CDM, its executive board issues a tradeable emission right (CER, or carbon credit) under the rules of the Kyoto Protocol.
India currently has around 20 per cent of the CERs. It figures just after China, which has earned around 70 per cent of CERs in the Asia Pacific region.
A senior analyst with a consultancy firm says there is: some uncertainty” about the future of Kyoto beyond 2012. “That has even affected the carbon prices; it has gone into a downward spiral,” he notes. “This is good news. For, companies can hold the credit points and sell at a good valuation.”
According to a recent Ficci report, public sector entities accounted for 7 per cent of the country’s total CDM portfolio as on 2010. “Participation of public sector entities in CDM has been growing over the years in some cases,” the industry chamber’s report said. “Interestingly, PSUs have emerged as the top runner in terms of the number of projects per company in their respective sectors — even moving ahead the private sector.”
Some of the PSUs with CDM projects include ONGC, SAIL, Iffco, NTPC and Nalco.
Ficci secretary-general Rajiv Kumar says the industry can now gear up for more positive action and innovation to address the challenge of climate change. According to a Bloomberg report, Torrent Power Ltd, Adani Power Ltd and JSW Steel Ltd are the Indian companies that are likely to benefit from climate change talks. Data compiled by them saysthe companies may win more than 77 million credits valued at about 400 million euros ($534 million) based on their December 9 closing price.
The Global Carbon market experienced a robust growth in 2009, when the market grew to $144 billion. Last year, recession and lack of regulatory clarity on the fate of the market post-2012 (when Kyoto was schedule to expire) led the market to fall to $142 billion.
