SBI goes green, to securitize, aid carbon credits

SBI says it plans to create financial instruments to aid carbon credit trading and management and fund and advise clients in the eco-friendly business, reports N Madhavan.

The country’s oldest bank is gearing for an emerging 21st Century opportunity.

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State Bank of India (SBI) said on Tuesday that it planned to create financial instruments to aid carbon credit trading and management and fund and advise clients in the eco-friendly business.

The business opportunity is linked to a growing global market in which industrial polluters in developed countries that cross administered emission limits of greenhouse gases fund clean technology projects in developing countries like India and China under a government-monitored trading regime.

SBI said in a statement that analysts peg the global carbon trading market at $100 billion by 2010 and the Indian carbon market has the potential to supply 30-50 per cent of the projected global market of 700 million CERs by 2012.

"SBI proposes to provide a single point delivery of services like implementation of CDM projects, advisory services and value added products like securitization of carbon credit receivables, carbon credit delivery guarantees and escrow mechanism for carbon credits, besides finance related to carbon credits/Clean Development Mechanism (CDM), under the Kyoto Protocol, to its customers,” SBI chairman OP Bhatt said.

SBI said it has signed a Memorandum of Understanding (MoU) with EcoSecurities India Private Ltd, MITCON Consultancy Services Limited and Cantor CO2E India Private Ltd to jointly provide one-stop solutions to industries for CDM projects and emissions trade.

"This tie-up which brings together the experience of these reputed CDM consultants and the large customer base of SBI will offer a complete package of services which will benefit a large number of industrial units,” SBI said.

London-based EcoSecurities is one of the world’s leading companies in the business of originating, developing and trading carbon credits. It structures and guides greenhouse gas emission reduction projects, acting as the principal intermediary between the projects and the buyers of carbon credits.

Experts say the earth’s atmosphere is heating up as a result of greenhouse gas emissions from industries, which have to cut back on the emissions to reduce global warming that harms agriculture and environmental safety.

The quotas of tradeable carbon credits through certified emission reductions (CERs) are governed under an international agreement signed in Kyoto.