Beta Career series talk: Carbon Finance

Mr. Guruprasad Mohapatra (IAS, 1986), the Managing Director of Gujarat Alkalies and Chemicals(GACL) and Gujarat Narmada Valley Fertilizer(GNFC) Co. spoke to the students of IIM Ahmedabad on the 14th of August. An M.A., M.Phil. in international relations from JNU and MBA from the University of Ljubljana, Slovenia he has a substantial experience in development and administration. He has had several appointments as collector in various districts of Gujarat and has been the Municipal Commissioner in Surat Municipal Corporation. His active association with power sector reforms during his stint with the State Electricity Utility is especially noteworthy. Under his able leadership GACL has gone from strength to strength and is currently the only PSU in the country, which has earned CERs and offers consultancy to other PSUs on CDR mechanism.

Outlining the Carbon Trading Market

Mr. Mohapatra started by outlining the origin of the carbon trading market. It has its roots in the Kyoto Protocol which came into force in 2005 and envisages a reduction in the emission of 6 polluting gases by industrialised nations in the period 2008-2012 by at least 5.2% as compared to the 1990 levels and is monitored by the UNFCCC. However, given the high level of industrial activity in such nations, it is difficult to achieve these standards and hence they have been given an option to purchase CERs (Certified Emission Reduction) from developing nations, giving rise to the Carbon trading market. The buying and selling of these CERs enables the industrialized nations to continue running their industries at similar levels of output while providing the developing nations the necessary capital and technology to use more eco-friendly sources of power.

Procedure to earn CERs

Mr. Mohapatra also enumerated the procedure to be followed by an organisation to apply to the UNFCCC for registering the carbon credits and the conditions that a project must satisfy in order to be eligible for getting CERs. He also talked about the various kinds of projects that fall under the Clean Development Mechanism (CDM) of emission reduction, the major industries that could benefit under this scheme and the major buyers of such credits. In this context, Mr. Mohapatra described the kind of projects that have been initiated by GACL, of which 2 have already been registered by the UNFCCC, and the kind of cash flows that were associated with the projects.

Growth Prospects in India

He also said that while the recession had adversely affected the CDM market both in terms of volumes and value, it was on a recovery path. Comparing India and China, the two biggest players in this market, Mr. Mohapatra mentioned that while China had a larger share in the number of registered CDM projects as compared to India, the quality of Indian projects was considered as superior to the ones from China and this is something Indians could aim to capitalise upon.

After doing a SWOT Analysis of the CDM projects, he concluded that their future hinges on whether the Kyoto Protocol is extended beyond 2012. He concluded that if it did the opportunity for Indian organisations to benefit from would be immense.

This session on Carbon Trading Mechanism was extremely interactive and provided an enthusiastic assemblage of students with keen insights into the CER industry along with instilling in them a desire to continue learning about this nascent but important field.

Anuj aka popat

Media Cell

(Inputs: Beta, the Finance Club @ IIMA)

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One thought on “Beta Career series talk: Carbon Finance

  1. Hi Anuj,

    I apologize for taking the credit of our post and using it without your permission on my blog. However i have mentioned the source in the post now. The reason for the delay is that i did not updated my blog for many months. you can see that no new post has been created since long. If you still have any issue, please let me know. Thanks. But i would have appreciated if you could have e-mailed me insipte of abusing me on my cbox infront of our readers.

    Regards,
    Atul

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