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S. Gopikrishna Warrier

CHENNAI, Oct. 28

ESSAR Power Ltd, which is in the process of changing from naphtha to natural gas as feedstock for its power plant at Hazira, is working on trading in the carbon dioxide that it could save through emission reduction.

According to senior Essar Power officials, the company has prepared the project document, which has been submitted to the Union Ministry of Environment and Forests (MoEF) for host country endorsement.

Depending on the availability of natural gas to run its 515 MW combined cycle power plant, the carbon dioxide savings expected by the company will be between two and four lakh tonnes per year. The company has made no calculations as yet on how much of money it could expect from trading this carbon.

Essar officials are waiting for a clearer picture to emerge from the carbon-trading scenario. They hope some clarity would emerge after the Eighth Conference of Parties (COP-8) to the Climate Change Convention, which is being held at New Delhi.

"Our aim is to conserve energy and improve the environment," said a senior official. "If we get some money in the process, it will be good."

The power plant at Hazira, which was set up in 1997, is designed to run on naphtha and diesel for starting up. The company started switching over to natural gas a year back. Half the naphtha requirement had been replaced with natural gas, and it was hoped that complete fuel switch would be made by January 2003, officials said.

"We invested lot of money making changes so that the turbines could run both on naphtha and natural gas," he said. "Our aim is to do the initial work and wait to see how carbon trading develops."

It is estimated, according to officials, that if one million units of power are generated using natural gas instead of naphtha there could roughly be a saving of 120 tonnes of carbon.

Though at an earlier stage of project preparation, Indian Aluminium Company Ltd (Indal) is also keenly observing the developments at COP-8 to decide on how to proceed with trading the carbon to its credit due to the energy conservation measures at its facilities.

According to Mr S.V. Jamble, Chief General Manager (Environment), the company is working on banking emission reduction already made from January 2000 and also that will be made in the coming years. "We have identified potential projects across our 11 facilities in six States."

Much of the data has been compiled, though the project document has not yet been prepared. Indal hopes to be able to identify consultants and matchmakers during COP-8 who will be able to take the company's process forward and also find buyers.

"We are keen on going for carbon trading once the issues related to trading get clear," he said. "We are going ahead cautiously."

He is hoping that soon the processes to be followed will become clearer both internationally and also within the country.

Efforts at carbon trading by Essar Power and Indal are within the ambit of the Clean Development Mechanism (CDM) of the Kyoto Protocol on reducing global emission of greenhouse gases like carbon dioxide.

Since only the developed countries have the mandate to reduce their emissions to five per cent below their 1990 emission levels, CDM permits them to buy carbon credit from developing country companies.

For the developed country entities it becomes cheaper to buy carbon credit from developing countries. This is because the cost to make technical innovations to conserve energy and reduce emissions is lower in India than in the developed countries, which have a higher technology level.

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