New Delhi: The Union government’s plans of earning around 24 million carbon credits per annum by distributing subsidized compact fluorescent bulbs (CFL) to millions of customers across the country, through local power utilities, has not found many takers among CFL manufacturers. The problem: neither the CFL makers nor the utilities want to bear the cost of the subsidy, even though they stand to benefit from the carbon credits.
“The Bureau of Energy Efficiency (BEE) has asked for expressions of interest from CFL manufacturers but for us to do that, we need concrete plans. Right now, it is too vague,” says Shyam Sujan, secretary general, Electric Lamps and Component Manufacturers Association of India (Elcoma), an industry body.
Carbon credits are given to companies or other entities that reduce their normal carbon emissions by investing in cleaner technologies (which emit a lower amount of greenhouse gases, and hence, lower carbon dioxide). These can be bought by industries, largely located in developed economies, who are mandated by the Kyoto protocol to reduce their carbon emissions below a threshold.
So far, Osram India Pvt. Ltd, is the only CFL manufacturer to show some interest, and is in talks with two electricity distributors, one each in Andhra Pradesh and Uttar Pradesh. Others complain that the details of the mammoth project are yet to be finalized.
Elcoma says that the project holds a lot of potential, but manufacturers remain reluctant to invest in it.
The project, which aims to distribute 400 million CFLs across the country, is one of the most ambitious carbon credit earning projects in the world.
CFLs can earn carbon credits because they use less energy than normal incandescent bulbs. The government’s plan involves CFL manufacturers tying up with electricity utility companies, which will distribute the CFLs to the end consumers at a subsidized price. The bulbs, which currently cost around Rs75-100 in the market, will cost customers only Rs15.
“That is the simple part. The more complicated part is how do you monitor how much energy is being saved through such huge numbers of CFLs?” says Ajay Mathur, director general, BEE. “How many are burning and for how long in a day?” The bureau has called for proposals for solutions to monitor usage.
“We received 19 proposals, out of which seven were state-of-the-art and the good thing is they are all domestic companies. We will finalize the company by the end of this month,” says Mathur.
Mathur adds that monitoring sensors will be placed between the bulb and the socket, which will relay the data through bluetooth, remote sensing or other wireless methods to a receiver.
The larger issue is that of the subsidy and how it will be funded.
“Manufacturers don’t want to invest in it yet,” says Sujan. It is estimated that each CFL will earn Rs25 a year through carbon credits and will pay for itself in two to three years. The average life of a CFL is around three years.
“A couple of electricity boards have agreed to absorb this cost,” says Mathur, who adds that several CFL companies are actually interested in the project.
Experts say that the initial reluctance will be overcome. They add that once Osram and a few others start earning credits, everyone will want to invest, as they are guaranteed a captive market under the scheme.
“We are interested in this. We have conveyed it to BEE and so have a few others (CFL makers). The bureau will shortlist (suppliers) on 4 August and we are willing to go where it wants us to,” says Vivek Mahindru, president (operations), Indo Asian Fusegear Ltd, a CFL maker.
“Surya Roshni, Havell, Philips, Indo Asian and Phoenix have declared their interest in this project,” says Mathur.
Executives in the industry who did not wish to be identified said that Osram was looking for some financial support from international firms for the project. Osram executives declined to comment.
Mathur adds that the investment (the funding of the subsidy) and profit sharing (splitting the revenue from carbon credits) have to be decided mutually by the manufacturer and the utility.
The other problem the project could run into is one of capacity: of the 100 million CFLs sold in India in 2006, 50% were imported from China in component form and assembled locally. However, after the Bureau of Indian Standards stipulated earlier this year that all CFLs being sold in India need to have a life of at least 6,000 hours, there has been a shortage in the market. If BEE’s project is successful, manufacturers will have to increase capacity substantially.
The Indian arm of Philips has just set up a new plant in Mohali and Indo Asian plans to increase capacity by 200% from the current production of 2 million bulbs a month.
While commercial establishments such as hotels and retailers have almost completely shifted to CFLs, only 5% of India’s households use CFLs, says Mathur. On average, a CFL costs three times as much as an incandescent bulb.
The controversial issue of mercury disposal in CFLs is being resolved by getting firms to buy back used bulbs at Rs2 and dispose them at facilities earmarked by the ministry of environment and forests.