India plans market to trade energy-saving credits

India, the world's fourth-largest polluter, plans to start a market to trade energy-saving credits that may reach 740 bn rupees ($ 16 bn) in five years as it seeks to curb emissions that cause global warming.
Businesses that exceed energy efficiency targets will be awarded credits that can be traded on power exchanges with companies that fail to meet the goals, the Bureau of Energy Efficiency director-general Ajay Mathur said.

The exchange-traded system may help India meet its target of cutting carbon intensity, or the amount of carbon dioxide released per unit of gross domestic product, by as much as 25 % from 2005 levels by 2020. Global initiatives to curb emissions were thwarted in December last year when 194 nations failed to agree on binding targets for reducing carbon dioxide.
"We'll start to see a lot more domestic and bilateral trading of this sort to pick up because as we've seen, it's incredibly difficult and time-consuming to implement a global, binding system," said Ishani Chattopadhyay, chief executive officer and founder of Arctic Holdings, a carbon management company with offices in New Delhi and Melbourne.

Australia has introduced energy savings certificates, known as white certificates, at the state level, Chattopadhyay said.
The UK, France, Italy and some US states have started similar programs, according to the Washington, DC-based World Resources Institute, an environmental policy group.

Efficiency targets
The government expects to set efficiency targets for companies by the end of March and is talking with Indian Energy Exchange and Power Exchange India, the country's two power exchanges, to set up trading protocols, Mathur said.
The government unveiled a plan in April aimed at saving the equivalent of 23 mm tons of oil by 2015 by encouraging power-intensive industries and businesses to reduce their consumption through energy efficiency measures. The National Mission on Enhanced Energy Efficiency intends to avoid power capacity additions of 19,000 MW that would otherwise be needed to meet demand and also curb carbon dioxide emissions growth by 98 mm tons annually, or 10 % of the current discharge, according to power ministry estimates.

The government will reimburse as much as 50 % of unpaid bank loans given to companies that seek to invest in energy efficiency projects, Mathur said at the venue of a conference.
"Banks are unwilling to lend to energy efficiency because it's not a business model they do," Mathur said. "To increase the comfort of financial institutions to lend for energy efficiency, we are creating a partial risk guarantee fund."
The energy efficiency bureau is talking to State Bank of India, the nation's biggest lender, HSBC Holdings and PTC India to provide loans for energy efficiency projects, he said.