The carbon credit market in India, which was adding to the bottomlines of companies, has become another victim of the global slowdown. “Industrial production in European nations has fallen substantially as demand for goods has fallen. Oil prices have also dipped in the period since August last year, thereby impacting carbon credit prices,” said Enam Holdings carbon credits head Vishal Kedia.

Certified emission reductions (CERs), commonly known as carbon credits, have seen a 50 per cent correction in the last 12 months. “Carbon credit contracts on the European Climate Exchange (ECX) were trading at around 23 euro in July last year, while they were trading at 12.66 euro on Friday (August 14). The price is now range-bound and is expected to hover between 11 and 13 euro,” added Kedia.

While Kedia says that the price for CERs has almost stabilised in India, other dealers say prices may fall further. “Barring some exceptional good news that might lead to a spurt in industrial production in Europe, or a sudden rise in oil prices, there isn’t any factor that might positively affect the price of CERs in the country. If the negative business sentiment continues, the price might fall to 8 euro,” said a Mumbai-based CER broker on condition of anonymity.

CERs had devalued substantially post the global financial crisis that began in September 2008, being quoted at 7 euro in January this year. “Prices have improved from January levels when sentiment had turned to pessimism. Now, as the sentiment is neutral, prices have stabilised. However, any bad news can pull down prices again,” said Kedia.

... contd.