Sales fetch Rs 1,000 cr
Global warming due to greenhouse gases has opened a new avenue for Indian companies. The savvy can use it to make more money than their annual turnover.
A recent sale of carbon credits by Gujarat Flurochemicals (known for Inox multiplexes) has created waves in Europe and Japan, where companies are desperate to reduce carbon emissions at their factories.
Low-profile Gujarat Flurochemicals, which runs the largest refrigerant plant in India, has agreed to sell carbon credits worth Rs 1,000 crore over the next three years to Noble Carbon Credits of Singapore. The deal will rake in Rs 350 crore for GFL in the first year, sources said. The windfall is nearly double the company’s sales of Rs 182 crore last year and more than thrice its net profit of Rs 96 crore.
An international pact, known as the Kyoto Protocol, has set emission caps for developed countries for 2008-2012. The agreement has been signed by 141 countries, notable refusals being US and Australia. Companies in these countries can either reduce greenhouse emissions to mandated levels or offset actual emissions by buying carbon credits from companies in developing countries that manage to reduce carbon dioxide levels.
GFL has promised to sell half of the carbon credits to Noble until 2012 at a minimum price of $10 a unit. It can buy up to 35% at the market price with a floor of $10 a unit. GFL will be free to sell the rest in the spot market.
Carbon credit
From Wikipedia, the free encyclopedia
Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one tonne of carbon dioxide reduction. India has emerged as a world leader in reduction of greenhouse gases by adopting Clean Development Mechanisms (CDMs) in the past two years.
Developed countries that have exceeded the levels can either cut down emissions, or borrow or buy carbon credits from developing countries
Reducing carbon credits
Organizations such as Rainforest Credits and Tropical Sierra are working in conjunction with universities all over the world to build an online information database known as the Rainforest Encyclopedia for businesses and industries to research and calculate what they need to invest in to offset their greenhouse gas emissions.
Emissions trading
Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. In such a plan, a central authority (usually a government agency) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups that emit the pollutant are given credits or allowances which represent the right to emit a specific amount. The total amount of credits cannot exceed the cap, limiting total emissions to that level. Companies that pollute beyond their allowances must buy credits from those who pollute less than their allowances. This transfer is referred to as a trade. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. The more firms that need to buy credits, the higher the price of credits becomes -- which makes reducing emissions cost-effective in comparison.
The overall goal of an emissions trading plan is to reduce pollution. In some cases, the cap may be lowered over time. In other systems a portion of all traded credits must be retired, causing a net reduction in emissions each time a trade occurs. In many cap and trade systems, organizations which do not pollute may also buy credits. Environmental groups that purchase and retire pollution credits reduce emissions and raise the price of the remaining credits as per the law of demand.
Because emissions trading uses free markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism. While the cap is usually set by a political process, individual companies are free to choose how or if they will reduce their emissions. Moreover, the government does not need to regulate how much each individual company emits, making cap and trade a very cost-effective method of controlling pollution on a large scale.
Major trading systems
Perhaps the most successful emission trading system to date is the SO2 trading system under the framework of the Acid Rain Program of the 1990 Clean Air Act. Under the program, which is essentially a cap-and-trade emissions trading system, SO2 emissions are to be reduced by 50% from 1980 to 2010 [1].
In 1997, the State of Illinois adopted a trading program for volatile organic compounds in most of the Chicago metropolitan area, called the Emissions Reduction Market System [2]. Beginning in 2000, over 100 major sources of pollution in 8 Illinois counties began trading pollution credits.
In 2003, New York State proposed and attained commitments from 9 Northeast states to cap and trade carbon dioxide emissions.
The European Union Emission Trading Scheme is the largest multi-national, greenhouse gas emissions trading scheme in the world. It commenced operation in January 2005 and all 25-member states of the European Union participate in the scheme.
The Kyoto Protocol will bind ratifying nations to a similar system, with the UNFCCC setting caps for each nation. Under the proposed treaty, nations that emit less than their quota of greenhouse gases will be able to sell emissions credits to polluting nations.
Green tags are a kind of reverse carbon trading scheme, available in the U.S. A renewable energy provider is issued one green tag for each 1000KWh of energy it produces. The energy is sold into the electrical grid, and the green tag can be sold on the open market as additional profit.
Critics argue that emissions trading does little to solve pollution problems overall, as groups that do not pollute sell their conservation to the highest bidder. Overall reductions would need to come from a reduction of permits available in the system. Likely this would occur over time through central regulation, though some environmental groups acted more immediately by buying credits and refusing to use or sell them. Nevertheless, the transfer of wealth from polluters to non-polluters provides incentives for polluting firms to change, especially if the market price for pollution credits is very high.
http://en.wikipedia.org/wiki/Emissions_trading
Global warming due to greenhouse gases has opened a new avenue for Indian companies. The savvy can use it to make more money than their annual turnover.
A recent sale of carbon credits by Gujarat Flurochemicals (known for Inox multiplexes) has created waves in Europe and Japan, where companies are desperate to reduce carbon emissions at their factories.
Low-profile Gujarat Flurochemicals, which runs the largest refrigerant plant in India, has agreed to sell carbon credits worth Rs 1,000 crore over the next three years to Noble Carbon Credits of Singapore. The deal will rake in Rs 350 crore for GFL in the first year, sources said. The windfall is nearly double the company’s sales of Rs 182 crore last year and more than thrice its net profit of Rs 96 crore.
An international pact, known as the Kyoto Protocol, has set emission caps for developed countries for 2008-2012. The agreement has been signed by 141 countries, notable refusals being US and Australia. Companies in these countries can either reduce greenhouse emissions to mandated levels or offset actual emissions by buying carbon credits from companies in developing countries that manage to reduce carbon dioxide levels.
GFL has promised to sell half of the carbon credits to Noble until 2012 at a minimum price of $10 a unit. It can buy up to 35% at the market price with a floor of $10 a unit. GFL will be free to sell the rest in the spot market.
Carbon credit
From Wikipedia, the free encyclopedia
Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one tonne of carbon dioxide reduction. India has emerged as a world leader in reduction of greenhouse gases by adopting Clean Development Mechanisms (CDMs) in the past two years.
Developed countries that have exceeded the levels can either cut down emissions, or borrow or buy carbon credits from developing countries
Reducing carbon credits
Organizations such as Rainforest Credits and Tropical Sierra are working in conjunction with universities all over the world to build an online information database known as the Rainforest Encyclopedia for businesses and industries to research and calculate what they need to invest in to offset their greenhouse gas emissions.
Emissions trading
Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. In such a plan, a central authority (usually a government agency) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups that emit the pollutant are given credits or allowances which represent the right to emit a specific amount. The total amount of credits cannot exceed the cap, limiting total emissions to that level. Companies that pollute beyond their allowances must buy credits from those who pollute less than their allowances. This transfer is referred to as a trade. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. The more firms that need to buy credits, the higher the price of credits becomes -- which makes reducing emissions cost-effective in comparison.
The overall goal of an emissions trading plan is to reduce pollution. In some cases, the cap may be lowered over time. In other systems a portion of all traded credits must be retired, causing a net reduction in emissions each time a trade occurs. In many cap and trade systems, organizations which do not pollute may also buy credits. Environmental groups that purchase and retire pollution credits reduce emissions and raise the price of the remaining credits as per the law of demand.
Because emissions trading uses free markets to determine how to deal with the problem of pollution, it is often touted as an example of effective free market environmentalism. While the cap is usually set by a political process, individual companies are free to choose how or if they will reduce their emissions. Moreover, the government does not need to regulate how much each individual company emits, making cap and trade a very cost-effective method of controlling pollution on a large scale.
Major trading systems
Perhaps the most successful emission trading system to date is the SO2 trading system under the framework of the Acid Rain Program of the 1990 Clean Air Act. Under the program, which is essentially a cap-and-trade emissions trading system, SO2 emissions are to be reduced by 50% from 1980 to 2010 [1].
In 1997, the State of Illinois adopted a trading program for volatile organic compounds in most of the Chicago metropolitan area, called the Emissions Reduction Market System [2]. Beginning in 2000, over 100 major sources of pollution in 8 Illinois counties began trading pollution credits.
In 2003, New York State proposed and attained commitments from 9 Northeast states to cap and trade carbon dioxide emissions.
The European Union Emission Trading Scheme is the largest multi-national, greenhouse gas emissions trading scheme in the world. It commenced operation in January 2005 and all 25-member states of the European Union participate in the scheme.
The Kyoto Protocol will bind ratifying nations to a similar system, with the UNFCCC setting caps for each nation. Under the proposed treaty, nations that emit less than their quota of greenhouse gases will be able to sell emissions credits to polluting nations.
Green tags are a kind of reverse carbon trading scheme, available in the U.S. A renewable energy provider is issued one green tag for each 1000KWh of energy it produces. The energy is sold into the electrical grid, and the green tag can be sold on the open market as additional profit.
Critics argue that emissions trading does little to solve pollution problems overall, as groups that do not pollute sell their conservation to the highest bidder. Overall reductions would need to come from a reduction of permits available in the system. Likely this would occur over time through central regulation, though some environmental groups acted more immediately by buying credits and refusing to use or sell them. Nevertheless, the transfer of wealth from polluters to non-polluters provides incentives for polluting firms to change, especially if the market price for pollution credits is very high.
http://en.wikipedia.org/wiki/Emissions_trading
