Biofuels Can Fuel India’s Carbon Trading Potential

Biofuels Can Fuel India’s Carbon Trading Potential

ASHOK B SHARMA (2004, sep 20 FINANCIAL EXPRESS)

NEW DELHI, SEPT 19: India can tap the $52-billion global market for carbon trading by encouraging production and use of biofuels and plantation of trees having oil-bearing seeds and materials, like Jatropha and Pongamia species. Other plantations having oil-bearing seeds or materials are Sal, Mahua, Kokum, Pilu, Phulwara, Dhupa, Neem, Mango, Kusum, Karanja, Ratanjyot, Jatropa, Tumba, Jojoba, Simarouba
Biofuels, apart from enhancing energy security, ensuring employment and development and mitigation environmental pollution, can be instrumental in carbon trading if certain criteria of the clean development mechanism (CMD) of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) are fulfiled, said experts.

According to a recent study by Point Carbon, the potential of global carbon market over the next several years is around $52 billion per annum. Growing at a rate of 4% per year, India, the sixth largest producer of greenhouse gases (GHGs), contributing almost 3% of the world’s total emissions (including CH4 from waste generated by cattle) is seen as one of the most attractive destinations for CMD linked investments. Estimates put the cumulative foreign direct investment (FDI) on account of such projects at about $2 billion, growing at the rate of $200 per year.

In light of increased evidences of climate change effects and their mitigation methodologies, several carbon market and investment mechanisms are slowly evolving. Though the carbon market dynamics are not transparent, the scenario indicates a huge potential in future. Till January 2004, the total volume traded in project based transactions is 78 million tonne of carbon dioxide emissions (CO2e). The buyer side included Japan with 41 per cent, The Netherlands and CFB with 23% each. According to estimates, if the CMD captures at least 35% of the global market, the estimated value to the concerned countries would be $18 billion.

A study jointly done by Srikanta K Panigrahi, consultant with the Planning Commission, A Mohana Reddy, director, ZenthEnergy, Hyderabad and P Narendra, a senior consultant of the same company said that as per one estimate, each tonne of bio-diesel produced or consumed leads to a reduction of GHGs by about three times ie avoids 3 tonne of CO2e.

These reductions in GHG emissions can be accumulated and traded as carbon credits. The CMD facilitates selling of these reductions in terms of certified emission reductions (CERs), a unit of which equals to one tonne of CO2e.

The study further said that the present market price of carbon credits is around $5 per CER, which translates into an additional revenue of Rs 690 per tonne of bio-diesel consumed of 75 paise per litre of bio-diesel consumed. This additional revenue from sale of carbon credits can be used to raise plantations of trees having oil bearing seeds and materials or meet unforeseen expenses during stabilisation period of bio-diesel technology, the study suggested. The study pointed out that during 2011-12 there would be a reduction in GHG emissions to an extent of 40 million CO2e with 20% bio-diesel blend in the country.

It also said that largescale plantation of trees having oil-bearing seeds and materials, like Jatropha and Pongamia species will fix carbon by photosynthesis via the carbon cycle.

When the oil derived from these seeds is burnt, same amount of CO2 is emitted as was sequestered.

Bio-diesel avoids release of anthropogenic emissions like CH4 and N2O as is the case with conventional petroleum diesel.

Thus the consumption of bio-diesel as an energy source either in stationery or mobile combustion leads to “no net-addition of CO2 to the atmosphere.”