The Indian Institute of Management, Lucknow (IIM-L), is set to introduce a course on carbon markets in July even as the Multi-Commodity Exchange (MCX) and the National Commodity Exchange (NCDEX), India’s premier commodity exchanges, are readying for carbon trading. The school plans to offer the course first to students studying agri-business management.
According to an IIM-L spokesperson, out of 21 agri-business management students, 11 have opted for the course, which aims to provide students with an understanding of the changing relationship between business and environmental management. “The course focuses on how businesses can proactively manage various environmental issues, besides exposing the students to intricacies of carbon markets,” says Sushil Kumar, coordinator of the programme at IIM-L.
This will be the first attempt by any business school in India to educate its students on such subjects.
The Kyoto Protocol to the United Nations Framework Convention on Climate Change assigns targets for the reduction of greenhouse gas emissions to the signatory nations. On an average, countries have to reduce their emissions 5.2% below their 1990 baseline over the next four years between 2008 and 2012.
Although these limits are national-level commitments, in practice, most countries will transfer their emissions targets to individual industrial entities, such as a power plant or paper factory. These companies can either actually reduce their emissions, or they can buy carbon credits assigned to ‘clean’ projects—ones that substitute a process that emits greenhouse gases with another that emits a lower volume of greenhouse gases or does not emit them at all. These processes are called Clean Development Mechanisms or CDMs. A market has sprung up around CDMs, with companies setting these up with an eye on the carbon credits they would earn. They then trade these credits on an international carbon exchange.
Companies can buy credits directly from another party, through a broker, or from an exchange.
Consider a factory that produces 10,000 tonnes of greenhouse emissions every year. The government asks it to reduce this to 8,000 tonnes. The factory either reduces its emissions to 8,000 tonnes or purchases carbon credits to offset the excess.
“India can generate 248 million tonnes of carbon dioxide equivalent or certified emission reduction (CER) units per year. In monetary terms, the country can annually make around $2 billion (Rs8,200 crore) by selling carbon credits. A CDM national strategy study predicts that India could take 10-15% of the global CDM market,” says Kumar. He adds that Reliance Industries Ltd, the Tata group, Aditya Birla Group, ITC Ltd, and Jindal Steel and Power Ltd are looking to set up CDMs.
Joseph Massey, deputy managing director of MCX, says that environment management will soon become the core part of management in any company. Neeraj Saxena, who works at Bharat Electricals Ltd at Ghaziabad, says he recently took a similar course offered by IIM-L. “A full time course would be a great plus for a country like ours that can earn millions of dollars clean way,” he adds. IIM-L has been conducting a three-day programme on corporate environmental management and carbon markets for middle and senior level managers in companies and non-corporate bodies.
The content of the 15-hour course includes environmental policy and law, environment management issues, environmental reporting, environmental impact assessment, partnership approaches to environmental management, carbon markets, and the potential of clean development mechanisms.