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Carbon markets essential to save fossil fuels in India : FICCI

According to reports, Dr. Tishyarakshit Chatterjee, Secretary, Ministry of Environment & Forests (MoEF), recently underlined the need to design carbon markets to address the short-term needs of investors in manufacturing, save fossil fuels for the future and meet the compulsions of environmental probity, sustainability, entrepreneurship and innovation over a long period.

Addressing the India Carbon Market Conclave 2011, organized jointly by FICCI and the MoEF, in partnership with The World Bank and the International Emissions Trading Association (IETA), Dr. Chatterjee called upon Indian entrepreneurs to push for a greater dose of technology transfer against their additional investments in the compliance regime. “Less explored technologies such as tidal and wave energy, ultra super critical systems, renewable fuel-based distributed energy production and supply, forest conservation credit, refinery upgradation for production and supply of clean diesel and renewable fuels for transportation and similar non0-mainstream efforts would go a long way in diversifying the carbon market.”

Dr. Chatterjee observed that there was an opportunity in the extension of Clean Development Mechanism (CDM) or even bilateral emission credit schemes in the second commitment period under the Kyoto Protocol in 2012, in whatever form such a mitigation cap is agreed upon. “Binding ourselves to an exchange programme against voluntary or domestic legal mandates in the future in the developed countries could possibly be a winwin solution” , he stated.

The Environment Secretary advised that in the negotiations on market based mechanisms, it was important to insist upon reform of the present long drawn verification process before approvals are granted for CDM projects. “Delays often render new projects unviable due to fluctuations in carbon price. Rigorous monitoring and verification also contribute to transaction costs, which can make smaller projects financially unviable,” he said.

He said that the availability of a limited number of approved methodologies for calculating additionality and thereby the number of CER potential in units, prove to be a hindrance and added that there is a need to expand the variety of creditable schemes beyond industry and into forestry, agriculture, small, tiny and cottage industry, rural energy and biomass sectors and develop creative credit generation methodologies for these non-traditional sectors.

Dr. Chatterjee emphasized that long term carbon price signal were fundamental to the deployment of the currently unviable technologies, as well as for the development of new technologies . “Well developed policies and regulations that can predict the reducing supply of carbon units and hence the carbon price band, concessional finance and Official Development Assistance (ODA) are all necessary in the overall climate finance package.

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