Domestic fridge makers hoping to cash in on carbon credits

Domestic fridge makers hoping to cash in on carbon credits

New Delhi: Soon, when old refrigerators are exchanged for new energy-efficient ones, some of the price difference could be paid by Western countries keen to protect the environment. That’s because at least two domestic home appliance makers are mulling plans to apply for carbon credits, on the basis of emission cuts achieved through new, more efficient refrigerators.

“Yes, the discussions are on at the managerial level but nothing has been finalized yet," said an official of Whirlpool of India Ltd who didn’t want to be named. Recently, Hindustan Unilever Ltd also submitted a proposal, which, if approved, will earn carbon credits for changing the refrigerant in ice-cream freezers at the retail level.

Carbon credits are generated by projects that reduce carbon dioxide emissions in developing countries. They can be purchased by developed countries to fulfil their emission commitments mandated under the Kyoto Protocol.

Refrigerators with higher energy efficiency reduce electricity consumption, thereby reducing the release of gases such as carbon dioxide. Exchange of lower-efficiency models with higher-efficiency ones, will, therefore, mitigate climate change a little.

Clean development mechanism, or CDM, under the United Nations Framework Convention on Climate Change, or UNFCCC, provides a platform to reduce warming gases such as carbon dioxide and earn carbon credits.

Projects in developing countries that use the technology to reduce warming gas emissions earn one carbon credit for every tonne of carbon dioxide they avoid. These credits are traded in climate exchanges across the world.

The Whirlpool official noted that changing processes for more efficient refrigerators is very capital-intensive. And that the process of earning credits is neither easy nor cheap.

“Because of high transaction costs involved in getting the project through the CDM executive board (which oversees the mechanism), companies are reluctant to bear the cost alone," said Amit Khare, an associate with ICF International, a global consultancy firm in energy, climate change, environment and the like.

ICF is involved with Whirlpool on such CDM projects.

Khare added that a 250-280-litre fridge, before the star labelling programme launched by the Bureau of Energy Efficiency, or BEE, consumed about 1.75 kWh/day (kilowatt-hour per day) compared with today’s 1.3-1.4 kWh/day. Most refrigerators in the Indian market currently are in the four- to five-star category, which are very energy-efficient. “Carbon credits are becoming more and more significant for this sector. Currently, most in the process industry that use refrigeration and cooling solutions are claiming these credits but manufacturers are also exploring their options," said Anand Joshi, president of Pune-based Indian Society of Heating, Refrigerating and Airconditioning Engineers, an air conditioning and refrigeration industry body.

But getting a baseline calculation on emissions savings is hard with appliances such as refrigerators. Khare said in such a calculation, usage patterns of millions of consumers will be hard to predict and monitor.

For such cases, where various stakeholders can earn carbon credits but the transaction is too costly, there is a programmatic way. This method has been used for India’s country-wide “Bachat Lamp Yojana" of exchanging energy guzzling incandescent bulbs for compact fluorescent lamps, or CFLs. But in this case, BEE had taken up the job and included distribution utilities in its fold to apply for credits.