Indian companies facing blues in going green
Sunday, 18 November 2007, 20:30 IST
Printer Print Email Email
New Delhi: Indian firms engaged in carbon reduction projects under the Kyoto Protocol are facing hurdles of unclear government policy and lack of information, according to a survey. India has the highest number of registered projects under the Kyoto Protocol's clean development mechanism (CDM), which has led to a flourishing global carbon market. The biggest challenge facing this new business is how revenues should be treated, said the survey conducted by Federation of Indian Chambers of Commerce and Industry (Ficci). The survey, conducted among 50 companies from 17 industry sectors, pointed out that the government should come out with a clear policy that the revenue earned from carbon credits be treated as export earnings and stressed the need for defining a CDM-friendly legal and regulatory framework. Sectors such as cement, pulp paper, hotels, oil and gas, mining, poultry, manufacturing and textiles have almost unanimously underscored the need for greater information dissemination on CDM and carbon market in the country like prevailing prices of carbon credits and buyers, and many such details which are essential for carbon market transactions. Over 66 percent of the respondents have indicated there is huge information gap related to CDM projects, while almost 54 percent have highlighted the lack of adequate capacity as a major problem. High transaction costs, according to 41 percent of respondents, emerged as the most important financial impediment to CDM project development since it is a capital-intensive process and the agencies involved have to bear large expenses as consultancy fees. Absence of CDM-related competence at the local level, besides lack of information on sector-specific methodologies, has come up as a critical barrier for project proponents, the survey found. Lack of technical know-how at the company level is a major issue for small and medium companies with CDM projects with limited technical capacity for undertaking such projects. One of the major risks associated with the business is that of fluctuating carbon emission reduction prices due to high volatility in the CDM market in India and abroad. This problem is further accentuated by currency risk due to fluctuations in the foreign exchange market. The survey also stressed other risks such as delivery and timing.
Source: IANS
siliconindia