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Latha Venkatraman

Credits, also known as CERs (Certified Emission Reductions), can be sold to countries that are required to cut emissions under the Kyoto Protocol.

Mumbai , Feb. 7

INDIA'S emergence as a big market for carbon credit projects has prompted EcoSecurities, a developer and trader of carbon credits, to look at investment opportunities in such projects through the special purpose vehicle (SPV) route.

"We would look at the renewable energy sector and agribusinesses to set up projects," Mr Marc D. Stuart, Director, EcoSecurities, said: The company had recently raised 80 million euros to make direct investments in carbon reduction schemes worldwide. Mr Stuart did not specify how much of that fund would come to India.

Polluting industries in India are exempt from emission reductions imposed in Europe. Therefore, they are able to work on emission reduction to earn credits.

Credits, also known as CERs (Certified Emission Reductions), can be sold to countries that are required to cut emissions under the Kyoto Protocol.

"We are looking at 30-40 projects in the renewable energy sector. These include small hydroelectric projects of 10-15 MW, as also 150-MW projects. Our focus is on the Western belt — Gujarat, Maharashtra," said Ms Ishani Chattopadhyay, Director, EcoSecurities.

She said EcoSecurities would take up carbon reduction projects, invest in them through an SPV, and also ensure that the projects are taken to fruition.

The investments would possibly entail equity stake holding arrangements.

"We look at projects, which have a possibility for emission reduction with a lot of due diligence. We are cautious. Once we identify projects, we probably would set up an SPV with a 100 per cent holding only for the emission reduction," Ms Chattopadhyay said.

The CERs coming out of these projects are later traded for a price. (CERs are bilaterally traded commodities.)

Brazil is currently a major supplier of CERs. India is picking up in the CER segment with increasing awareness about the revenue possibilities.

But Mr Stuart and Mr Chattopadhyay believe that China could emerge as a major supplier of CERs.

Along with Brazil and India, China is also a signatory to the Kyoto Protocol.

Developed countries are required to reduce emissions under the Kyoto Protocol but countries such as Brazil and India are exempted.

So far, 156 countries have ratified the agreement. India's financial sector is looking at this market for investment opportunities.

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