Mumbai: Companies with small projects that reduce carbon emissions are creating consortiums to club their projects together and take advantage of carbon trading.
Companies can get credit for reducing carbon emissions, and that credit can be sold to foreign businesses that have emissions in excess of their country’s limits.
This trading system was formalized by the Kyoto Protocol, a global treaty that has been in force since 2005 and aims to reduce the effect of harmful emissions on the environment.
Smaller Indian companies have become eager to capitalize on this system with projects of all sizes, as awareness about carbon trading has gained ground, and carbon has gained value.
“In earlier years, companies were looking at bigger projects,” said Sudipta Das, partner, risk advisory services, at audit firm Ernst & Young India Pvt. Ltd. “Now they are looking at projects big and small. With the price of carbon increasing significantly, even smaller projects that were not viable in groups or individually are becoming more and more viable,” he added.
Das said the consortium approach becomes useful in selling as well: “If they can club together and sell, they get a better price.”
One year ago the Bangalore-based steel super store, Triveni Enterprises, installed and commissioned a 1.25 megawatt windmill managed bySuzlon.
“It was primarily for financial benefits and second for environmental,” said project manager Avinash Agarwal, who is working to put together a pool of small windmill owners who have individual windmills.
Previously, companies with small carbon projects would not attempt to gain carbon credits because it wasn’t commercially viable.
Most companies do not have the in-house expertise to register the projects and gain the proper approval for credit. Other companies with such small projects were simply not aware of the value of carbon or how to trade credits.
Windmills of about 1MW capacity and small fuel substitution projects are examples of projects that are a candidate for bundling.
In some cases, the consultants help bring companies with small projects together. “We become an aggregator,” said Chintan Shah, head, regulatory affairs and carbon credits practice, at one such company, Synergy Global Pvt. Ltd, which has been floated by the promoters of Suzlon Energy Ltd.