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C. Shivkumar

Bangalore , Dec. 16

CANARA Bank has offered to negotiate for carbon credits on behalf of industrial and domestic solar power and water heater customers as part of its green energy financing initiative.

Speaking to Business Line, Mr R. Prabha, General Manager, said: "We have started talks with the UNEP (United Nations Environment Programme) for bundling all the solar energy users in the country."

This would also entail auditing of all the users for aggregation of the solar or green energy capacities, he added.

Green energy also includes mini- and micro-hydel power generation initiatives.

Under the Kyoto Protocol, the carbon credit trading mechanism involves purchase of permits from low green house gas emitters by high emission entities.

"The carbon credit will provide the investors in solar/green energy equipment an additional cash flow stream," Mr Prabha said. This cash flow stream would be continuous based on the equipment usage.

However, there is no mechanism for using the credits for amortising the loans taken for funding the equipment purchase.

Instead, the cash flow stream would function to bring down the cost of equipment purchases.

Canara Bank is the first bank to take this initiative. However, negotiations with the UNEP are still at a nascent stage, he said. Ahead are further negotiations and working out the mechanism for a providing an additional cash flow stream.

Besides, for all these initiatives, banks would need to obtain the permission of the Reserve Bank of India. Canara Bank will then be expected to appoint energy auditors certified by the Bureau of Energy Efficiency for bundling all solar/green energy users.

Currently, few solar water heater users in the country have availed themselves of this facility.

Using this facility of carbon trading would bring down the cost of funding some of the projects, Mr Prabha said.

Already, the Ministry of Non-Conventional Energy Sources provides subsidies for purchase of solar electricity equipment. The subsidy programme allows intending solar energy users to fund purchase of equipment at interest rates as low as two per cent. The remaining interest of up to five per cent is subsidised by the Ministry.

These benefits would be in addition to the tax incentives already available. These include accelerated depreciation under Section 32 of the Income-Tax Act.

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