Tuesday, March 5, 2013

Its full carbon reductions and energy efficiency potential

India stands 2nd in the global carbon trading regime under Kyoto Protocol, a spot which it ceded to China in 2006 and is pacing quite slowly to realize its full carbon reductions and energy efficiency potential

Experts highlight the biggest hurdles in establishing a domestic carbon trading scheme in India. As per Nimisha Pandey, Senior Scientist at the Climate Change Division of The Energy and Resources Institute (TERI), “We have to balance our growth requirements along with our commitments to reduce carbon emissions. Hence, it is not easy to commit the kind of targets or capital investment in developing technologies for reduced carbon emissions and energy efficiency. The biggest challenge in India for a carbon emissions trading scheme to flourish is how to ensure proper accounting of the projects and calculation of actual reductions made. It must not happen that the same project gets accounted twice for a domestic carbon credits as well as for generating emissions reductions under CDM.” Even for the apparently fast paced growth of CDM projects, the reality is sobering. “Large projects have limitation in terms of CDM eligibility, for example a coal power generator doesn’t qualify as a CDM project until it uses latest technology such as super critical, and when it’s used, then only they qualify as CDM projects.” says Ashutosh Pandey, CEO, Advisory Services, Emergent Ventures India (EVI), one of India’s leading carbon advisory and energy consultancy firm. Though, on the domestic front, something is stirring albeit a bit slowly which is customary of India’s democracy (read lethargy).

India at present does not have any carbon emissions reductions trading mechanism but under the National Mission for Enhanced Energy Efficiency (NMEEE) which comes under the aegis of the National Action Plan on Climate Change (NAPCC) (Indian government’s ambitious climate change combat plan launched in 2008), there exists a trading mechanism called Perform, Achieve and Trade (PAT) which envisages certificates of energy savings done by entities to be traded on an exchange which will be applicable to 9 sectors like power, steel, coal mining etc. The targets will be set on a unit (plant, mine, refinery etc.) wise basis for producers in each sector. As a result of the implementation of this Mission over the next five years, 23 million tons oil-equivalent of fuel savings in coal, gas, and petroleum products have been estimated by 2015 every year along with an expected avoidance in capacity addition of over 19,000 MW. The consequential carbon dioxide emission reduction is estimated to be 98.55 million tons annually. Compare it to the 246 million CERs or 246 million tonnes of carbon equivalent emissions achieved by Indian CDM projects by 2012 end in 6-7 years, the differences in revenues earned amounts to over $2 billion with the CERs being traded in the international markets at $15 - $25 in recent months while an energy saving unit (in terms of kilo watt hour) will certainly cost lower than the $15 for a CER.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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