India to benefit from carbon trading boom: World Bank

Monday, 21 October 2002, 19:30 IST
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Worldwide trading of credits in carbon dioxide emissions linked to global warming is expected to be over 68 million tones this year as against 200 million tones in the last six years, the World Bank said Monday.

NEW DELHI: "With trading in carbon credit doubling and quadrupling every year, India and China stand to benefit as major sources of carbon trading," said Ken Newcombe, senior advisor and manager of Prototype Carbon Fund (PFC), a World Bank subsidiary set up to mobilize public and private investment to catalyze the market for reducing greenhouse gas emissions. Under the Kyoto Protocol, which is expected to come into force in the near future once Russia and Canada ratify it as they have promised to, the industrialized countries would have to reduce their carbon dioxide emissions to 5.2 percent of the 1990 level between 2008 and 2012. Using a mechanism under the Kyoto Protocol, several countries in Western Europe have been trading their obligation for reducing emissions by funding environment friendly projects, mostly in Eastern Europe. So far, an estimated 200 million tones of carbon has been traded for between $350-$500 million, said Newcombe. To help India capitalize on the potential market, PFC Monday entered into an agreement with the state-owned Infrastructure Development Finance Corporation Ltd (IFDC) to handle carbon finance operations on behalf of the World Bank and set in motion climate friendly projects in the country. Initially, the global body will provide $10 million towards pushing ahead energy projects like renewable energy and using biodegradable waste to generate power. "India is well placed to capitalize in this field as it has the required technology and already some projects are underway," said Newcombe. He expected the global carbon trading market to grow over $1 billion annually by 2008 once the Kyoto Protocol comes into effect. Though carbon trading has been growing at a rapid pace, relatively few traders in the new market are willing to do business with Third World nations due to apprehensions about the market, said Michael Carter, World Bank Country Director for India. "This agreement will give the desired comfort level to help developed countries and parties to undertake projects in India," said Carter. Though the U.S. has decided against signing the Kyoto Protocol, Newcombe saw good possibilities of American multinational companies looking at India to trade carbon credit to meet their domestic environment commitments with several states having enacted legislation on reducing greenhouse gas emissions. So far, India has submitted six projects to the World Bank for carbon trading, said Newcombe. "With the benefit of committed carbon finance from the World Bank, we now have a strong foundation to promote the development of the carbon market through the clean development mechanism (CDM) in India," said IDFC chairman and managing director Nasser Munjee.
Source: IANS