Banks have started latching on to the carbon credit bandwagon as they feel financing clean development mechanism (CDM) projects a good and feasible business proposition.
Recently, SBI entered into an understanding with MITCON Consultancy Services Ltd, Ecosecurities India Private Ltd and Cantor CO2E India Private Ltd to provide a one-stop solution to industries for CDM projects and emissions trade. Apart from finance, it will offer advisory services, securitisation of carbon credit receivables, delivery guarantees and escrow mechanism for carbon credits.
The global carbon trading market is pegged at $100 billion by 2010. And the Indian carbon market has the potential to supply 30-50% of the projected global market of 700 million CERs (certified emission reductions) by 2012. SBI is chalking out strategies to tap the market, OP Bhatt, chairman of the bank had said.
State Bank of Hyderabad MD Amitabha Guha sees financing CDM projects as a good opportunity. ?I see this business as potential for generating fee-based revenue. Over the years, the revenue stream should be considerably high for commercial banks as with increased awareness on environment protection, the market for carbon credit will become huge within the next decade,? he said.
Indian Bank executive director A Subramanian has a similar view. ?We will follow the SBI route and forge alliances with other organisations to offer a complete solution?.
ICICI Bank and IDBI Bank have gone one step ahead and have put in a dedicated team. Says Sanjeev Mantri, GM, small enterprises group of ICICI Bank, ?We have formed a dedicated team for carbon credit. Efforts are also taken to forge alliances for this initiative. The bank has launched ?Go Green??a programme which gives SMEs an opportunity to reduce their carbon footprint.?