Carbon credit mkt: India’s share 15-35%

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Mumbai, Feb 04: The global carbon emission market is estimated at USD 200-billion and India can have a share of at least 15-35 per cent in it by FY’12, a top industry official said.

“There is a global market of USD 200-billion for Clean Development Mechanism (CDM) to be traded by December 2012, out of which India could have a share of at least 15-35 per cent,” Director, Planning Commission and Director General, Carbon Minus India (CMI), Srikant Panigrahi, said in his address at a carbon credit conference held here today.

India’s average annual greenhouse gas reduction is pegged at 33.21-million credits or nearly 13 per cent of global annual reduction average of 257.28-million, according to the UN Framework Convention on Climate Change data.

Since Indian projects are smaller in size and they are largely unilateral, our share is less at 13.08 per cent at present. Hectic bundling is necessary to reduce transaction cost and make it competitive, Panigrahi said.

Commenting on the road ahead for India, Panigrahi said “we need to mobilise private sector participation in CDM and encourage CDM participation of large public sector emitters like power and transport sectors.”

The government’s role is critical as a facilitator with different bilateral/multilateral organisations in organising carbon trade fairs or to create a equal platform for small, medium and large sellers, Panigrahi said.

“India may get a mandatory cap on greenhouse gas emissions anytime now. Unlike the time when the Kyoto Protocol was drafted, India is not the ninth-largest greenhouse-gas emitters (GHG) and is now in the third place after China and the US,” he said.

India with a huge potential for generation and sales of Certified Emission Reductions (CERs) should be harnessed properly by ecosystem participants, MCX’s Chief Economist V Shunmugam said.

Commenting on the impact of the global financial crisis on the carbon market, Shunmugam said the fall in overall demand, negative growth rate in various sectors, credit crunch and slowdown in overall investments may hit the carbon market.

With low price for emission instruments, companies will delay technological improvements and run older, less efficient factories for longer while higher prices for CO2 emissions certificates motivates financially for emitters to switch from high polluting fuel to greener fuel.

In Europe, Italy and east European countries, including Poland, have already cited the impending economic slump as an argument to press for freeing the emissions permits for their power generators.