China overtakes India in carbon credit biz
26 May 2008, 0000 hrs IST,Nitin Sethi,TNN
NEW DELHI: India might have gained a headstart in the carbon market but it has
been left behind by the China juggernaut.
The latter has become the world leader in the carbon credit business with a
market share of 73% in the volume of credits traded in 2007 as compared to
India’s 6 per cent, a recently released World Bank report has said.
But the entire carbon market could be in for a major shake-up depending on how
the negotiations on the future of the
Kyoto Protocol, which are to be concluded by 2009, shape up.
Carbon credits are generated under the Clean Development Mechanism, mandated by
the UN, where developed countries having greenhouse gas emission reduction
targets offset them by funding clean technology in developing nations. In
return, they earn the credits that they can use to set off their reduction targets.
The European Union has put in a proposal that will cap the amount of credits it
would allow its member countries to buy from countries like India on a
project-basis.
There is a growing voice within the EU that post-2012, countries like India
should be restricted from trading in the carbon market unless they also take
mandatory sector-wise energy efficiency targets — something India has vehemently
opposed, claiming it would create non-tariff barriers as well as hurt the
country’s economic growth.
The report notes, "The project-based compliance market is facing a ceiling
proposed for the EU carbon exchange. The European Commission, whose member
states have benefited greatly from the availability of CERs at a reasonable
price, is limiting its continued use conditional upon the decisions of major
emitters (read: India and China) on post-2012 commitments."
While the Kyoto negotiations continue, China’s running away with the carbon pie
might mean India Inc is losing out, but it does not necessarily imply that
Indian environment is worse off.
China gets away with a larger share of the market by setting up large-scale
projects, as the Bank report points out, while India has smaller, more
environment-friendly and diverse projects that allow medium level players to
also dip their fingers in the lucrative and growing business.
--
Vern Weitzel (Mr.) BSc, BA, MA, M Env Man & Dev
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