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In one of the first carbon trading deals in the country, SRF Ltd has forged an agreement with Shell Trading International to deliver 500,000 Certified Emission Reductions by April 2007.
SRF Chairman and Managing Director Arun Bharat Ram said the price per tonne of carbon dioxide offered by Shell was significantly higher than the prevailing market price of $10 per tonne. Bharat Ram, however, refused to divulge the financial value of the deal citing a non-disclosure agreement with Shell.
One tonne of carbon dioxide reduced through a Clean Development Mechanism (CDM) project, when certified by a designated entity, becomes a tradable CER.
India Inc takes to carbon trading
SRF's oxidation project, which is expected to reduce nearly 38 million tonne of carbon dioxide equivalent over a ten year period, is a CDM Project of the Kyoto Protocol. It is yet to be registered by the United Nations Framework on Climate Change Convention or the UNFCCC.
Unlike small and medium enterprises, large companies like SRF are in a better position to negotiate and bargain with buyers of CERs because of their large-scale emissions, said Ram.
Buyers can rely on big companies to deliver CERs by 2007, failing which they can be fined up to Euro 100 per tonne of extra carbon dioxide emission, he added.
The project has received approvals from the designated national authorities in India, Germany and the United Kingdom. The company has announced the commissioning of its HFC-23 oxidation plant in Jhiwana, Rajasthan.
SRF Ltd is the biggest Nylon Tyre Cord Fabric producer in the country and the eighth largest in the world.