China May Top India in Carbon Credits - UK Official
Date: 22-Nov-05
Country: INDIA
"I think China is likely to receive more in investment than India, if people like doing business in a particular country and the opportunities are there, then that business will flow," Jed Jones, an adviser to the office, told Reuters.
The credits, or Certified Emission Reductions (CERs), are products of the Kyoto Protocol, which aims to reduce carbon dioxide and other greenhouse emissions from 2008. World carbon dioxide emissions are forecast to soar 60 percent by 2030, mainly due to a rise in pollution from developing countries.
Jones is part of a British business delegation to India along with 20 dedicated carbon finance firms interested in buying carbon credit contracts from Indian companies.
India has been exempted from the emission cuts because of its relatively low energy consumption and is seen as a lucrative destination by dedicated carbon credit buyers. China is also an exempt Kyoto signatory.
Carbon credit funds say poor infrastructure and lack of clarity on organisational and financial structure of Indian companies are a major hurdle for investment.
"It's really up to the countries themselves as to how efficient its infrastructure is ... that eventually will determine where the investment goes," Jones said. "You can't be spending a portion of significant amount on administrative issues."
"They (the funds) are probably in the order of 500 million pounds ($860 million), they want to dispose their money," he said.
Laurent Segalen, head of European Carbon Fund, which raised 105 million euros ($124.1 million) in June to acquire carbon credits, says China could attract three times more investment than India.
Segalen, finds the Chinese more competitive and aggressive and said they offer cheaper credits to carbon finance funds.
"China is aiming at a 50 percent market share while India is thinking about maximising the value of each deal," he said. "You can sign contracts much below 10 euros in China but here (in India) people want 15 euros."
Sector-wise, Segalen said his fund prefers coal mine methane and wind energy businesses in China and is interested in India's renewable energy projects such as bio-gas, and generation of electricity by sugar mills and hydro power plants.
A British Trade and Investment statement quoted a World Bank assesment which said UK private companies were the third largest investors in climate change projects worldwide.
"It is estimated that 1 billion pounds is available in the UK for clean development mechanism investment and India is one of the leading potential markets for the investment," the statement said.
Analysts estimate that Indian companies, from steel and sugar firms to utilities, could generate 500-600 million CERs or nearly a quarter of a global traded total of 2.5 billion units by 2012.
($US1=0.5814 British pounds)
($US1=.8461 Euro)
