$100 billion jackpot awaits India in carbon credit trade

There is a great opportunity awaiting India in carbon credit trading which is estimated to go up to $100 billion by 2010. In the new regime,...

There is a great opportunity awaiting India in carbon credit trading which is estimated to go up to $100 billion by 2010. In the new regime, the country could emerge as one of the largest beneficiaries accounting for 25 per cent of the total world carbon trade, says a recent World Bank report.

The country’s dominance in carbon trading is expected to be driven, not so much by the domestic industry, but more by its huge tracts of plantation land, estimated to be over 15 million hectares, much larger than Australia which aims to be a major player in emission trading by adding 2 million hectare plantation by 2020.

The report points out that certified emissions reductions (CERs) are the currency of the clean development mechanism (CDM). CERs can be used to acquire technology, capital investments in projects aimed at reducing carbon emissions.

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Seeing the importance of the carbon bazzar, the Bank has entered into an agreement with Infrastructure Development Finance Company (IDFC) last month wherein IDFC will handle carbon finance operations in the country for various carbon finance facilities.

The agreement initially earmarks a $10-million aid in a World Bank-managed carbon finance to IDFC-financed projects that meet all the required eligibility and due diligence standards.

“The exercise is expected to leverage an investment of $100 million for climate-friendly projects in the first phase,” says World Bank country director for India Michael Carter.

This is a mechanism designed to allow firms that fail to meet emission standards set by the 1997 Kyoto Protocol, to buy credits from other firms that meet their targets, says Carter.