Capitalise on carbon credits, if your project is in the planning stage

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: We are setting up a three star hotel project in Himachal Pradesh. We are told that we could earn more by generating carbon credits. What are the carbon credits? To which agency we should apply for registration? Kindly also tell us from where we could have more details.
— DS Mann

You can indeed generate extra income as your project is at the planning stage. In 1997, a World Earth Summit was organised at Kyoto, Japan, which resulted in a multi-lateral agreement to save the earth from the damage being caused to the environment by Green House Gasses (GHGs).

Some 160 odd countries ratified the agreement under which the signatory countries agreed to limit their green house emissions to the respective levels of 1990. Those countries that are producing GHGs in excess to the agreed levels are required to offset their excesses by buying credits. This is known as Clean Development Mechanism (CDM) or more commonly, Carbon trading.

Carbon credits are awarded to companies/projects that replace the GHG producing mechanisms/technologies with the environment friendly mechanisms. Therefore, some countries can produce excess carbon credits because they produce less polluting gases, whereas some may have to buy such credit to meet their obligations. The latter countries pass these obligations to the companies that emit GHGs.

Ultimately, it is the commercial organisations that would be selling or buying credits. That is how a market mechanism is created. Since developing countries can start with clean technologies, they are more likely to generate these credits, which they can sell to those who require credits, chiefly industrialised countries like the US and EU, to meet their obligations.

In this case, you could employ a range of energy saving devices and use better products to save energy. Your project would fall under category Type II of energy efficiency projects.

For example, you could achieve that by replacing condensers, STL pumps and production pumps etc. with low consumption and high efficiency pumps; incandescent lamps by PL & CFLs; feet electronic chokes by electronic chokes; by installing variable frequency drives; heat recovery wheel (which recovers the heat from the exhaust and reduces the load on the A/C plant). You could also install auto power factor control panel among other things.

By each such replacement, you could calculate the energy saved and build your case to be considered for carbon credits.

To operationalise CDM projects, the National CDM Authority has been established in India under the aegis of the environment and forests ministry.

A mechanism has been put in place to calculate per tonne of Certified Emission Reduction (CER) and to evaluate and approve projects as per acceptable international norms. More than 90 projects have already been cleared and many have concluded long term buying contracts.

You may contact: The National CDM Authority (designated national authority (DNA)), ministry of environment and forests, Room No. 115, Paryavaran Bhawan C.G.O Complex, Lodhi Road, New Delhi - 110 003.

Telefax: +91 11 2436 2252, E-mail: dir.cc@nic.in; Website: http://www.cdmindia.nic.in

You may also have more details from CDM India: http://www.cdmindia.com/index.htm.

The website also contains a list of institutions, NGOs, consultants etc whom you could get in touch for further assistance.

Ours is a small pharmacy registered under SSI units. We are required to meet WHO’s GMP norms and are installing new machinery. We have two questions about the credit-linked subsidy scheme, which we want to avail. First, many of the machines that we are installing are not listed in the scheme. Will our application be considered? Second, as the scheme is being operated by Sidbi, will we have to go for refinance to Sidbi only, or could we get it from our present bank, PNB?
— Vijesh Shah, Trade Centre, Ellisbridge, Ahmedbad

The primary objective of the scheme is to assist technology up gradation. The list of technologies and machines is only indicative and not exhaustive.

Therefore, as long you could justify how the new additions of machines could improve the processes, there is every chance that it would be considered. For inclusion of your machinery, you may first approach Sidbi with your application. They would forward it to a committee (in the office of the DC-SSI), which would take a final decision. However, the operational part is quite time consuming.

As far as the condition of refinancing from Sidbi alone is concerned, it is not necessary. You could very well avail the loan from your existing bankers.