Truthfully, we don’t necessarily believe in global warming and the jazz that goes with it; but just for once, we decided to step into the enemy’s shoes and see why the carbon emission spiel of the developed world might work for India Inc. (just this time) by Gyanendra Kumar Kashyap
As a matter of fact, while ONGC is actively involved in biodiversity conservation, IndusInd Bank under its “Green Office Project” is resorting to solar–powered ATM, which is estimated to save around 1,980 kw of energy annually besides reducing carbon emissions by 1,942 kg. For their part the IT behemoths, Infosys, Wipro and HCL are doing everything from recycling water, building computers and laptops without carcinogenic products, lowering their per capita consumption of power to generating at least 30 % of their energy needs from renewable sources. The efforts by the IT behemoths in terms of meeting approximately one-third of their energy requirement from renewable sources will go a long way in increasing the current share of renewable energy projects in CERs (Certified Emission Reduction units), which is currently pegged at only 19%. Numerically speaking CERs will increase to 76 million by December 2012 from the current 14 million units, which translates to a mindboggling Rs.40 billion by 2012 (assuming a price of €10 per unit of CER). This certainly is a big enough reason as to why companies both big and small are looking to cash in on this opportunity.
Interestingly, going by the prevailing rates at which CERs are being traded at the exchanges, it is not so big companies like SRF, Torrent Power, Gujarat Fluorochemicals, Navin Flourine International and Rashtriya Chemical & Fertilisers, which according to UNFCC estimates have reduced their emissions respectively by 3.8, 3.1, 3.0, 2.8, and 0.9 million tonnes of CO2 equivalent, are set to mop up huge amounts from the market. Anmol S. Jaggi, Director, Gensol Consultants (a 360 degree Carbon Solution Provider) says to B&E, “Over the last 5-7 years, green has shifted from being a mere CSR activity to a balance sheet activity. It pays to be environmental friendly.” To put things in perspective, consider the case of HUL, the first soap manufacturer to go green. Just by adopting environment friendly manufacturing process HUL has earned 15,000 CERs (1 CER point is granted for the reduction of 1 tonne of CO2) meaning an addition of nearly €150,000 to the company’s books.
Though the attempts to garner greenback against their carbon foot prints are more visible now, it’s still a fact that owing to their lack of awareness, most Indian companies are losing on the opportunities to monetise carbon credits. KPMG in a report in November 2007 (Climate Change: Is India Inc. Prepared?) stated that only a measly 21% of top CEOs in India had taken steps to mark out their ‘carbon footprint’, and believe it or not the number hasn’t improved since then.
So, as Professor Nicholas Stern, IG Patel Professor of Economics and Government, India Observatory, London School of Economics says, “The world needs to cut carbon dioxide emissions to 2 tonnes per capita by 2050 and India would need to do the same,” this would be the biggest opportunity for India Inc. to prove a point in front of their global peers, if not for a social cause, then at least for few million dollars more.
As a matter of fact, while ONGC is actively involved in biodiversity conservation, IndusInd Bank under its “Green Office Project” is resorting to solar–powered ATM, which is estimated to save around 1,980 kw of energy annually besides reducing carbon emissions by 1,942 kg. For their part the IT behemoths, Infosys, Wipro and HCL are doing everything from recycling water, building computers and laptops without carcinogenic products, lowering their per capita consumption of power to generating at least 30 % of their energy needs from renewable sources. The efforts by the IT behemoths in terms of meeting approximately one-third of their energy requirement from renewable sources will go a long way in increasing the current share of renewable energy projects in CERs (Certified Emission Reduction units), which is currently pegged at only 19%. Numerically speaking CERs will increase to 76 million by December 2012 from the current 14 million units, which translates to a mindboggling Rs.40 billion by 2012 (assuming a price of €10 per unit of CER). This certainly is a big enough reason as to why companies both big and small are looking to cash in on this opportunity.
Interestingly, going by the prevailing rates at which CERs are being traded at the exchanges, it is not so big companies like SRF, Torrent Power, Gujarat Fluorochemicals, Navin Flourine International and Rashtriya Chemical & Fertilisers, which according to UNFCC estimates have reduced their emissions respectively by 3.8, 3.1, 3.0, 2.8, and 0.9 million tonnes of CO2 equivalent, are set to mop up huge amounts from the market. Anmol S. Jaggi, Director, Gensol Consultants (a 360 degree Carbon Solution Provider) says to B&E, “Over the last 5-7 years, green has shifted from being a mere CSR activity to a balance sheet activity. It pays to be environmental friendly.” To put things in perspective, consider the case of HUL, the first soap manufacturer to go green. Just by adopting environment friendly manufacturing process HUL has earned 15,000 CERs (1 CER point is granted for the reduction of 1 tonne of CO2) meaning an addition of nearly €150,000 to the company’s books.
Though the attempts to garner greenback against their carbon foot prints are more visible now, it’s still a fact that owing to their lack of awareness, most Indian companies are losing on the opportunities to monetise carbon credits. KPMG in a report in November 2007 (Climate Change: Is India Inc. Prepared?) stated that only a measly 21% of top CEOs in India had taken steps to mark out their ‘carbon footprint’, and believe it or not the number hasn’t improved since then.
So, as Professor Nicholas Stern, IG Patel Professor of Economics and Government, India Observatory, London School of Economics says, “The world needs to cut carbon dioxide emissions to 2 tonnes per capita by 2050 and India would need to do the same,” this would be the biggest opportunity for India Inc. to prove a point in front of their global peers, if not for a social cause, then at least for few million dollars more.
Gyanendra Kumar Kashyap
For more articles, Click on IIPM Article.Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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