Despite the current global slowdown, N. Yuvaraj Dinesh Babu, CEO of The Carbon Rating Agency, or CRA, says, “There is a growing consensus on not sidelining the measures needed to deploy clean-energy resources.” Babu should know. With a 15-year tenure that includes stints at Asia Carbon Global, a Singapore-based carbon assets management services firm, and Indian Renewable Energy Development Agency Ltd, or Ireda, a government-owned energy financing organization, he is one of the pioneers of the
clean-technology market. At CRA, a subsidiary of IDEAcarbon Ltd, which provides ratings, research and strategic advice on carbon finance, Babu tracks the vibrant carbon marketplace in Asia. At the third annual Carbon Forum in Singapore, IDEAcarbon inked a deal with Japan Bank for International Cooperation to provide data for the primary market information system on carbon projects. In an email interview, Babu discusses trends in the Asian carbon market. Edited excerpts:
Where does India rank in the overall clean development mechanism, or CDM, space and what are the major changes you foresee in this space in the next two-three years?
India ranks No. 2 in terms of developing CDM projects and generating carbon credits. India leads in developing the largest number of unilateral CDM projects. This essentially indicates that Indian promoters have not actively engaged with a developed country buyer for transaction of their carbon credits.
Instead, Indian promoters seem to prefer to hold on to their CERs (certified emission reduction, also known as carbon credits) and effect a transaction when the market is more favourable. This unilateralism has led to innovation in structuring the carbon credits contract, including trading of contracts based on carbon credits on India’s leading two exchanges!
India’s CDM service sector is booming and there are hundreds of consultancy firms and other service firms offering CDM and its related services (each tonne of carbon dioxide emission that is reduced through a CDM project generates one CER).
With the economic slowdown, there are apprehensions whether corporate focus on sustainability and clean technology will continue. How real is this threat?
While there is a certain shift in priorities of corporations with the current slowdown in the economy, there is a growing consensus on not sidelining the measures needed to deploy clean-energy resources. The challenge is to arrange for continual support for clean-energy projects under implementation for the next two-three years and the role of regulatory bodies and the financing institutions are crucial. Governments must extend renewable energy tariff policies and provide incentives for use of renewable energy as such projects can then raise adequate funding.
Which are the industry sectors in India with a clear green agenda?
Almost all industry sectors in India participate in the CDM. In the public sector, it is steel, oil and natural gas and even Indian Railways. In the private sector, all emission-intensive industries such as cement, steel, paper, aluminium and chemicals are participating in the CDM to reduce greenhouse gases, or GHG. Leading private industrial houses, namely, Shree Cement Ltd, Aditya Birla Group and the Tata group, have demonstrated how seriously they are looking forward to CDM by implementing successful GHG emission reduction projects.
What are the dominant trends in the carbon credits market in Asia? How do the market trends here compare with other such markets globally?
Asia dominates the global carbon market to the tune of 77% with a potential supply of 2.26 billion CERs until 2012. Over 3,714 projects are developed under the CDM all over Asia under various sectors. The potential installed power capacity of projects in Asia totals a mammoth 58 gigawatts in hydro, wind, biomass, geothermal, biogas, landfill gas, solar, tidal, energy efficiency-based own generation and coal bed/coal mine methane sectors. India and China implement a record number of small-scale CDM projects involving small-scale and medium promoters.