IDBI Carbon Development News Letter February 2015 Issue - SSAD 091

Transcription

1 Dear Readers, The current month has been very significant and historic for combating Global climate change. The Ad hoc Working Group on the Durban Platform for Enhanced Action (ADP) held meeting during 2nd week of February 2015 in Geneva Switzerland which ended on a positive note. The ADP has been constituted under UNFCCC to draft and finalize the text of a new, universal climate change agreement which could be the basis of negotiation at the next summit scheduled at Paris by the end of calendar year The Geneva meeting was attended by 200 countries. During the aforesaid meeting India s demand for funds from the Green Climate Fund to meet the full cost of IPR of environmentally sound technologies to address climate change was supported by many other groups including the Like Minded Developing Countries (LMDC) and the Africa Group. The Govt of India has already taken proactive measures in order to cut down GHG emission by way of encouraging energy conservation and focusing on generation of Renewable Energy. The government has set an ambitious target of 1, 00,000 MW of installed solar power capacity by 2022 from the present around 3,000 MW. In this direction first Renewable Energy Global Investors Meet & Expo - RE-Invest 2015 was organized during February 15-17, 2015 IDBI Carbon Development News Letter February 2015 Issue - SSAD 091 by MNRE with an objective to showcase the Government of India's commitment to the development and scaling up of renewable energy in India to meet the national energy requirement in a socially, economically and ecologically sustainable manner. The central theme of RE-Invest was to attract Page 1 of 6

2 large scale investments for the renewable energy sector in India. In this issue, we present our readers the following: 1. Carbon and REC Market Developments in India 2. International Carbon Market Developments 3. CER Market on ICE- Price Trends 4. CDM Statistics as on January 31, Carbon Credits / CDM Services by IDBI Bank Ltd 6. India Chiller Energy Efficiency Project (ICEEP) 1. Carbon and REC Market Developments in India i. During January 2015, four new Indian CDM projects were registered. With this, cumulatively 1545 Indian CDM projects were registered with UNFCCC as at end of January 31, Total 7597 CDM projects have been registered under CDM mechanism till January The Indian CDM projects have cumulatively received million CERs as at the end of January For last three years, the CERs are traded at very negligible prices below Euro 1 and currently they are traded at around 0.03 Euro cents each due to lack of demand and uncertainty of new market mechanism. ii. Renewable Energy Certificates () The 47th trading session for Renewable Energy Certificates () was concluded on January28, 2015 on both Indian Energy Exchange (IEX) and Power Exchange of India Ltd (PXIL) respectively, on very optimistic level. Over 1.11 crore non-solar and lakh solar were offered for sell. Of which 5.37 lakh non solar and thousand Solar were traded as against 3.36 lakh non solar and 2059 solar redeemed during the previous trading session in December Though the upward movements have been seen during last few trading sessions, but the trading volume in January 2015 session increased substantially and it was perhaps the highest trading volume since inception of the REC market. This jump in trading volume was attributed to compliance of RPO by few obligators in the last quarter of FY A recent amendment in the REC regulations introducing Vintage Based Multiplier has also prompted obligated entities to purchase Solar to fulfill Solar RPO. iii. According to the third amendment to REC Regulations, Solar projects under REC framework prior to the date of third REC Amendment Regulations would be eligible for multiplier of 2.66 i.e REC for one megawatt hour of electricity injected into

3 the grid. This multiplier will be applicable up to 31st March, 2017 and thereafter the said projects will receive 1 REC for 1 MWh of renewable energy. The Forbearance and Floor Price of Solar have also been revised from Rs. 13,400 and Rs. 9,300 to Rs. 5,800 and Rs. 3,500 respectively. The down ward revision in the prices of Solar was also triggered increase in trading volume of solar. iv. Summary of traded during January 2015 session on IEX and PXIL is given below: Particulars IEX PXIL Total Non Solar Solar Non Solar Solar Non Solar Solar Sell Bids (Nos.) 67,20,193 6,88,581 44,59,132 7,30,388 1,11,79,325 14,18,969 Buy Bids and volume cleared (Nos.) Price discovered (Rs.) Volume Cleared (Nos.) 3,93,081 30,650 1,43,928 1,490 5,37,009 32,140 1,500 3,500 1,500 3,500 1,500 3,500 3,93,081 30,650 1,43,928 1,490 5,37,009 32, International Carbon Market Developments: As per the latest report from the U.N. Intergovernmental Panel on Climate Change (IPCC) a rise in global temperature of between 0.3 and 4.8 degrees Celsius (0.5 to 8.6 Fahrenheit) by the late 21st century was envisaged. Countries such as India are likely to be hit hard by global warming, which will bring more freak weather such as droughts that will lead to serious water shortages and affect agricultural output and food security. IPCC Report has observed that the world has not really woken up to the reality of water crises it is likely to face in coming years primarily because of likely profound changes in the water cycle due to climate change. 3. Certified Emission Reduction (CER) market Price Trends on Intercontinental Exchange (ICE) European Carbon Market -Spot CER market During December 2014 CERs were traded at Spot prices below 10 Euro Cents per CER.

4 Price trend for future CER Contracts -Dec.2015, Dec.2016 and Dec.2017 ICE future CER Ccontracts Lowest January 2015 December 2014 Highest Volatility (%) Lowest Highest Volatility (%) Dec Dec Dec The future CER contracts for Dec. 2015, Dec 2016 and Dec 2017 were traded at around 0.46 per CER respectively. 4. Clean Development Mechanism (CDM) Statistics (As on January 31, 2015 ) Total no. of projects registered with UNFCCC 7597 No. of Projects requesting registration 1 Total No. of CERs issued to projects Total No. of Registered projects from India (% to total ) Total No. CERs issued to Indian Projects (% to total ) 1.53 bn 1545 (20.30%) mn (13.20%) During the month of January 2015 total 8 new CDM projects were registered and 01 are requesting registration. As on January 31, 2015 cumulatively 7597 CDM projects were registered with UNFCCC. China continued to lead with 3,762 registered CDM projects followed by India and Brazil with 1545 projects and 333 projects respectively. As of January 2015, Indian CDM projects have been cumulatively issued mn CERs, out of the total 1.53 bn CERs issued to all CDM projects. Indian share of issued CERs was about 13 % of the total issuance. 5. Carbon Credits / CDM Services by IDBI Bank IDBI Bank has undertaken the pioneering role in the Indian banking sector in the area of environment banking. Since early 1990s, as a Financial Intermediary of the World Bank, IDBI has been involved in the national projects for phase out of production and use of Ozone Depleting Substances (ODS) viz. Chloro Fluoro Carbons (CFCs), Hallons and Carbon Tetrachloride (CTC). IDBI Bank is actively involved at national and international levels in various forums on climate change and is working with no. of national and multilateral agencies for sustainable carbon credit business. IDBI Bank s advisory services relating to CDM include the

5 following : complete range of CDM related services tailor-made to suit the needs of the clients as under: A. Funding of the CDM projects; B. Advisory Services for facilitating registration and trading of Certified Emission Reductions (CERs)/ Voluntary Emission reductions (VERs) C. Upfront Financing against Carbon Credits Receivables D. Related Banking and financial advisory services for syndication (Debt/Equity) etc. 6. India Chiller Energy Efficiency Project (ICEEP) The Ministry of Environment & Forest (MoEF), GoI, in association with the World Bank has launched ICEEP in September 2009 for provision of financial grant incentives for accelerated replacement of energy inefficient Chloro Fluoro Carbon (CFC) based centrifugal chillers with energy efficient non-cfc based centrifugal/ screw chillers. The project had arranged grant funds from the Global Environment Facility (GEF) and Multilateral Ozone Trust Fund (MLF) aggregating USD7.30 million. IDBI Bank has been implementing the ICEEP as Project Implementing Entity (PIE) and Financial Intermediately (FI). The project development objective is to promote deployment of energy efficient technologies to reduce GHG emissions under Kyoto Protocol and support GoI in compliance with the Montreal Protocol obligations for complete phase out of new CFCs in the production & consumption sectors through provision of incentives directly to chiller owners in order to lower their opportunity costs and upfront capital cost and demonstrate significant rate of return on investment for CFC chiller replacement. The project has identified more than 100 CFC chillers with cooling capacity 100 TR and above of which 59 have been registered for replacement with sanction of grant aggregating US 2.24 million under the project. So far grant incentive aggregating USD 0.85 million (Rs.404 lakh) has been released to 16 beneficiaries for replacement of 26 old CFC chillers by 28 new energy efficient non CFC chillers. The project has generally achieved its primary objective of phase-out of CFC based chillers (eligible under project) in the country.

6 For further details please contact: Name Shri B. D. Save, DGM Shri R. K. Rai, AGM Mrs. Sunila Vasani, Manager id Disclaimer: The information presented has been prepared based on the information obtained from various news items and other publicly available sources. IDBI Bank does not take responsibility for correctness of the same. IDBI Bank shall not be liable for any loss incurred by anyone for any action based on this/any issue of IDBI Carbon Developments. Neither IDBI Bank, nor any of their respective associates, nor any of their respective directors, employees or advisors make any expressed or implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, projections, or other information set forth in this issue of Carbon Developments or the underlying assumptions on which they are based or the accuracy of any computer model used and nothing contained herein is, or shall be relied upon as a promise. By accepting a copy of this issue of IDBI Carbon Developments, the recipient accepts the terms of this disclaimer, which forms an integral part of this issue. *****