There will likely be an agenda to make a global rulebook for carbon trading across the world. A lot of negotiations are needed to build a consensus among all the nations on this topic.
As UK is trying to rally nations to standardize carbon markets globally in the upcoming COP 26 UN Climate Change Conference which it is hosting, the success of the endeavour can have multiple ramifications including funding various sustainable development projects currently being implemented in India. Mahua Acharya, MD and CEO, Convergence Energy Services (CESL), tells FE’s Anupam Chatterjee how the dynamics of the global carbon markets can help CESL, which is under the Union ministry of power, to scale up its initiatives. Excerpts:
Can you throw some light on the current status of carbon markets in the world?
There will likely be an agenda to make a global rulebook for carbon trading across the world. A lot of negotiations are needed to build a consensus among all the nations on this topic. Currently, many nations have decided to continue carbon trading among themselves bilaterally, before the UN comes up with the standards. There is confusion about whether the carbon credits sold by a country will be a part of their nationally determined contributions (NDC) pledged under the Paris climate targets. For example, global sovereign buyers want to know how India will adjust carbon credits after exports. Currently, the market comprises mostly of corporates, who voluntarily buy carbon credits to reduce their net emission levels. Now the size of this market is around $280 billion per year, but it will rise multifold with the formation of an international carbon market.
How does it impact CESL?
All our programs under CESL are related to carbon credits. We distribute LED bulbs in rural areas at Rs 10 per bulb, and this was to be subsidized by global entities buying the carbon credits against such sales. Under the pilot program, we aim to distribute 15 million LED bulbs and later scale up the program to 75 million LED bulbs. The supply cost of each LED bulb is near Rs 100 and around $3 per carbon credit is required for us to break even under the 15 million LED pilot program. If we get rates of $4 per carbon credit, it will help us take the LED program to more remote areas like the northeast where the supply and logistics costs are higher. On a ballpark basis, 10 LED bulbs are equivalent to one carbon credit.
How is the LED distribution program progressing?
We have already distributed 10 lakh LED bulbs across Uttar Pradesh and Bihar under the ‘Gram UJALA’ scheme. The cost has been borne by us. The distribution had begun in March this year but was interrupted by the second wave of the Covid pandemic and its associated lockdowns. CESL is providing rural households 7-Watt and 12-Watt LED bulbs with three years’ warranty against the submission of working incandescent bulbs. As of date, 5.9 lakh LED bulbs have been distributed in Bihar, covering 1.2 lakh households. In Uttar Pradesh, the number is 4.4 lakh bulbs in 87,546 households. These bulbs consume 88% less electricity as compared to their incandescent counterparts and can help in achieving 59 units of energy-saving per month per household, considering 5 LED bulbs per household.
Can you specify a few other areas where CESL is operating?
EESL, which is our holding company, is the nodal agency for the FAME-2 scheme and we are helping institutions in the procurement of electric vehicles. We are planning EV-bus procurement for nine cities. There are also EV-two-wheeler programs in the works for Goa, Kerala, and Andhra Pradesh. We have recently signed an agreement with the Andhra Pradesh government to provide 25 thousand EV-two-wheelers to state government employees, and the number may increase as per requirements. We are also planning programs for aggregating and deploying EV-three-wheelers on a large scale. The three-wheeler program is not only for e-rickshaws, but can also be used for freight transport, carrying garbage and ferrying LPG cylinders.