Saving Earth and filling pockets

Shai Agassi calls it quits to commit himself to alternate energy, environmental policies and other issues. Norway aims be zero emission country by 2050 and reduce emissions of greenhouse gases by 30% before 2020. Carbon trading business is reaching close to a billion dollar per annum and its growing.

ICICI Bank announced a Rs. 100 crore fund on April 26, to support innovation and development of green business in India, focusing on energy-efficient and environment-friendly ventures. Well, needless to say the interests on saving earth from greenhouse emissions are growing. This concern has been there for a while. So, whats new now? Let me explain what motivates countries like India and China in this program.

Before I proceed, let me introduce to one buzz word, carbon trading.

• Under Kyoto protocol, developed countries agreed that if their industries can’t reduce carbon emissions in their own countries, they will pay others like India (a signatory to the Protocol) to do it for them and help them meet their promised reduction quotas in the interest of worldwide reduction of greenhouse gases.

• The “currency” for this trade is called Carbon Emission Reduction (CER). One unit of CER is one tonne equivalent of carbon dioxide emission.

• UN Framework Convention on Climate Change registers the project, allowing the company to offer CERs produced by the project to a prospective buyer.

Now that we know the currency for carbon trading, lets look at who is gaining this currency in India.

Vadodara-based Gujarat Fluorochemicals Ltd (GFL), and Gurgaon-based SRF are likely to see their bottomlines grow more by selling carbon credits, a waste product, than their main business, refrigerants.

SRF made Rs 149 crore from the transfer of Certified Emission Receipts (CERs, also called carbon credits).

So far, GFL has received around Rs 350 crore (including advances) toward sale of carbon credits. They claim a potential of upto Rs 400 crore per annum if they are able to sell all of 6 million CERs.

It was the first Indian company to get registered for a CDM project in March 2005 for 3 million CERs. With 114 CDM-registered projects, India is currently the world leader.

Meanwhile, SRF which got registered for its 3.83 million CERs in December the same year, has taken the lead in actual trading accounting for 39 per cent of market share in the country.