The Hindu Business Line : Amruthakrishna Group plans biomass-based power project

Market risk
EcoSecurities is taking the market risk of CERs in these projects.
Prices of carbon credits fell last week as European countries reported better environmental compliance.

Mumbai , May 4

The Andhra Pradesh-based Amruthakrishna Group of Companies has embarked on a biomass-based Clean Development Mechanism (CDM) project that could possibly bring in additional revenues by a sale of carbon credits emanating from the project.

EcoSecurities, originator, developer and trader of carbon credits, is helping Amruthakrishna to set up the CDM project.

4 projects in Karnataka

Amruthakrishna is setting up four power projects in Karnataka. These projects (one 6-MW plant, two 7.5-MW plants and one 15-MW plant) will use biomass material such as tapioca stem, sugarcane trash, maize stalk, groundnut shell, coconut rachis and stem, cotton stalk, agro industrial waste, wood waste, woody biomass and rice husk to generate power that will be supplied to the State grid through Gulbarga Electricity Supply Company Ltd.

"Our estimate is that these power plants will generate 8,00,000-1,200,000 CERs (certified emission reductions or carbon credits) by the end of 2007 until 2012," Mr Henning Thiel, Business Development Manager, EcoSecurities, said. "But the estimate will become clearer later," he said.

EcoSecurities is taking the market risk of CERs in these projects.

Prices of carbon credits fell last week as European countries reported better environmental compliance.

Under the Kyoto Protocol, Indian industries are exempt from emission reductions. On the contrary, they are able to work on reducing emission and thereby earn credits. These credits are sold to countries that are mandated to reduce emissions under the Protocol.

PDD for UN registration

While Amruthakrishna is designing and setting up the power plants, EcoSecurities is working on the Project Design Document (PDD) for UN registration, which enables the sale of CERs.

"We evaluated the projects, did an eligibility study before deciding on entering this project," Mr Thiel said.

The registration process is difficult, expensive and there are too many barriers for small entrepreneurs. That is why EcoSecurities steps in to take on the paper work surrounding the PDD, Mr Thiel said.

In this project, EcoSecurities has agreed to buy CERs at a fixed price, thereby taking the carbon credit market risk.

EcoSecurities recently made its entry into India and the developer and trader of carbon credits sees a huge potential in the country.

According to EcoSecurities, the Indian market's potential in carbon credits is at $40-50 million annually.

"There are very many stages in working on the PDD. Things could go wrong at any of the stages," Mr Thiel said.