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India Inc smells green money

Indian companies are going a long way in finding alternate sources of energy, and in the process, encashing a new opportunity in carbon credits. Gaurav Choudhury reports. Carbon tamed is greenback earned

business Updated: Jun 05, 2010 02:20 IST
Gaurav Choudhury

Imagine using coconut shells to make ketchup. Or cashew kernels to make soap. Indian companies are going a long way in finding alternate sources of energy, and in the process, encashing a new opportunity in carbon credits.

Carbon credit is the simple term used to describe a new kind of commodity, generated by nations that get credits in exchange for keeping their carbon emissions that threaten the earth’s climate below levels set by the United Nations Framework Convention for Climate Change. This business has spawned the so-called CDM (clean development mechanism) regime.

Under this, governments certify companies that generate credits which are exchanged for cash from nations that cross the limits.

As many 746 Indian companies, representing more than 40 sectors, account for 1,056 projects that have applied for CDM accreditation. CDM allows companies to implement emission-reduction projects. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of carbon-di-oxide (CO2).

A CDM project must provide emission reductions that are additional to what would otherwise have occurred.

According to a Crisil Research study, the number of CERs in India is expected to increase to 246 million tonnes by December 2012, from 72 million tonnes in November 2009.

Industry chamber FICCI says as many as 114 firms out of India’s top 500 frms are involved in CDM projects. “The aggressiveness and vigour with which Indian companies are participating in the carbon market is demonstrated by India’s impressive project portfolio,” said Ficci Secretary General Amit Mitra.

The green-hued firms are spread across sectors such as steel, power, chemicals and consumer goods.

Power sector leads the table on with 68 projects followed by wind energy (54), sugar (30) and cement (26) that have applied for CDM accreditation.

For example, public sector NTPC is working on coal gasification. D.K. Jain, director, technical, at NTPC said gas would produce much less carbon emissions than coal.

Similarly, BHEL is commissioning a 120MW power plant based on underground coal gasification technology.

Many private firms are involved in municipal solid waste management to generate energy.

Consumer goods maker Hindustan Unilever Limited (HUL) has developed a new process to make soap from “Plough Share Mixer” (PSM) technology that eliminates the need for steam in soap making. That cuts carbon emissions by as much as 15,000 tonnes per year.

“As a result, we became the first Unilever business worldwide to be awarded carbon credits under the CDM,” said Pradeep Banerjee, HUL’s supply chain director.


The company is using agro-waste materials such as coconut shells, bagasse and sawdust to generate energy for running boilers.

India’s green clout is expected to rise with more renewable energy projects in the UN list. Of India's 1,846 renewable energy projects in November 2009, only 15 per cent were registered with the UNFCC.

The government says electricity distributors must purchase at least 5 per cent of their requirements from renewable energy sources and has also offered alternative energy firms preferential tariffs and duty-free imports of equipment, besides write-offs to aid financials.

“We expect the government's focus on renewable energy power projects to drive this growth,” said Nagarajan Narasimhan, Director, Crisil Research.

Carbon tamed is greenback earned