Tuesday, 25 March 2008

Article in Times of India, Mumbai on 25th March, 2008

Green Ventures ropes in European companies
25 Mar 2008, 0033 hrs IST,Namrata Singh,TNN

MUMBAI: The Green Ventures Carbon Fund has tied up with a few major European financial partners and are actively looking for Indian strategic partners and project developers either for carbon credits or to jointly set up environment friendly projects.

Though names of the partners was not revealed, Green Ventures India MD Krish R Krishnan told TOI : "We can leverage this strategic relationship to effectively become more aggressive investors and assimilate a larger carbon credit portfolio in India now and for a much longer term."

TOI had reported in its edition dated January 14, 2008, that the New York-based Green Ventures International has dedicated its first Asian fund of $300 million to India. The objective is to monetise carbon credits from clean development mechanism (CDM) projects across the country.

"We continue to make significant strides in our mission to serve as India's carbon commerce catalysts. In particular, we continue to both sponsor as well as initiate our own slew of renewable energy Initiatives," said Krish R Krishnan.

The plans include development of a 5mw wind farm in the wind corridor in the Tirunelveli district in Tamil Nadu.

Further, based on the latest incentives announced by the Centre on new and renewable energy to support solar power, Green Ventures is exploring the option of setting up a 5 Mega Watt solar farm in the next quarter in Tamil Nadu.

There is also continued activity supporting development of a 120mw run of the river hydro plant in Indo-Nepal border, which is the largest independent power project currently in Nepal and a 100% export oriented site with the power slated for the Indian grid.

Green Ventures will source carbon credits from Indian projects, which have adopted cleaner methods of manufacturing to reduce emission of greenhouse gases, and in turn sell them to other global buyers.

Tuesday, 4 March 2008

Futures Trade in Carbon Credit

Indian companies implementing clean development mechanism (CDM) projects to earn carbon credits have till now been conservative about entering the forward market to sell the credits.

The forward market was thus practically non existent. However, a fresh beginning is being made by certain companies entering into forward contracts to sell carbon credits.

According to carbon market consultants, the price in the forward market ranges between Euro 10 to Euro 14, depending on the nature of the project and as to whether it is registered with the UNFCCC (United Nations Framework Convention on Climate Change) or is in the process of being registered. The price in the forward market is lower than the prevailing prices at which carbon credits are being sold, i.e. around Euro 17.

"Companies entering into forward contracts are those who feel that prices may fall in the future. Those who feel there is room for further appreciation in prices, are not entering forward contracts,"

While names of companies which have entered into such contracts were not forthcoming, companies like Konark Power, Amrit Biotechnologies, Yash Paper, to name a few, are understood to have entered into such deals with foreign buyers.

Since these are largely bilateral deals, there is a confidentiality factor attached to such deals. However, as per rules the ministry of environment is informed about every transaction taking place in the carbon market, be it in the forward market or current market.

Indian companies have been shy of entering the forward market in anticipation of appreciation in prices of carbon credits. However, consultants are advising clients to follow prudent strategies and adopt a more balanced portfolio of carbon credits, in which nearly 2/3rd of the portfolio is hedged in the forward market.

In its primary stage, certain prototype carbon projects which required funding had, in 2001-02, entered into forward contracts which were then securitised with banks to raise funds. After that, however, as activity on CDM projects gathered momentum, and prices appreciated, the forward market took a backseat.

Now, there seems have been a revival with fresh funding requirements on the rise for CDM projects.

Sources said that banks are open to lending to companies in need for funds against forward contracts. "Companies are entering into forward contracts even when the project is not registered, because there are takers for carbon credits from Indian projects. Some buyers are even willing to enter into contracts till 2012," said sources.

While currently prices of certified emission reduction (CERs) are stable, certain factors such as global political uncertainty and the quantum of emission reduction units (ERUs) from the joint implementation (JI) market, are some of the factors which could impact prices.