Crisis hits carbon trading and investments

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MUMBAI: Global meltdown has affected investments in projects to curb Greenhouse gases in poorer regions as many of the renewable energy projects in developing nations such as India and China need huge investments for implementation This in turn has also hurt the carbon emissions trading market which is expected to grow at 33% in 2009 compared to 84% in 2008 and 107% in 2007.

According to a study conducted by Associated Chambers of Commerce and Industry (ASSOCHAM) and Eco Pulse (AEP) there has been only 28 per cent growth in project activities registered by the Clean Development Mechanism (CDM) Executive Board in six month period from 1109 registered projects in July 2008 to 1421 registered projects in February 2009 under the United Nation Framework Convention on Climate Change (UNFCCC).

ASSOCHAM estimate that the amount of carbon dioxide equivalent (CO2e) being traded globally in 2009 would value at USD 157 billion, growing by merely 33 per cent as compared to the year 2008.

However, the ASSOCHAM study noted that the average annual Certified Emission Reduction (CERs) from registered projects during July 2008 to February 2009 grew by 20.92 per cent from 218,345,930 to 264,022,976 respectively.

“Prior to the crisis developers of CDM projects tap the benefits of the growing market for carbon credits to finance a part of their project costs, however, in the present scenario financing seems to be a mammoth task, which might affect projects in delaying or postponements ”, said Mr. D.S.Rawat, Secretary General, ASSOCHAM.

The one time big greenhouse emitters such as the USA and other industrialized countries that buy huge carbon permits from developing countries like India, China and Brazil to cover their own emission limits, are no more able to shell out large amount of euros to these countries as shrinking demand forced large corporate firms to cut their production and industrial emissions along with the crash in the prices of Certified Emission Reductions (CERs) from 22 euro to 8 euro within 2-6 months.

The developed countries have to reduce emissions of greenhouse gases to an average of 5.2 per cent below the 1990 level, according to the Kyoto Protocol, between 2008 and 2012. These industrialized can also buy Certified Emission Reduction (CERs) from developing countries that do not have any reduction obligations, in case their industries are not in a position to lower the emission levels themselves.