Indian cos in carbon trade to take a hit
With prices of carbon permits having declined to a record low of 70 cents per unit, down from the peak of 17 euros, Indian firms — which sell about 90% of their total credits to Europe — might feel the tremors in the next few months.
Compared with firms like ITC and ONGC, which have large projects up for certified emission reduction (CERs), the impact will be greater on chemical manufacturers such as SRF, Gujarat Fluorochemicals, Chemplast Sanmar and Navin Fluorine International, which have used these revenues to fund their capital expenditure for expansion and diversification into new business activities. They get their revenues from CERs by reducing hydrofluorocarbon (HFC) gases and may see a hit of more than 5% on every project registered under the CDM.
For instance, a major chunk of revenues for SRF used to come from selling CERs on its HFC destruction project but after the European Union decided to stop recognising these credits starting 2013, SRF’s chemicals segment faced the biggest stress with revenues falling 38% to R206.3 crore and segmental profits dropping 77% to R42.1 crore.
According to SRF, its thermal oxidation plant had a 10-year lifetime
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