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You cant cheat a honest man – Carbon credits are a Rs 28,000-cr ‘opportunity’

For the rich, by the rich, to the rich

The Indian government has approved more than 1,400 projects as part of the Clean Development Mechanism (CDM) that could attract around $6 billion(Rs 28,000 crore) into the country by 2012 through sale of Certified Emission Reduction (CER) certificates, according to Environment and Forests minister Jairam Ramesh.

The National CDM Authority (NCDMA) in India has accorded Host Country Approval to 1,455 projects. These projects have seen an investment of more than $33.7 billion(Rs 1.6 lakh crore). If all these projects get registered at the CDM executive board, it will earn developers over 600 million CERs by 2012. At a conservative price of $10 per CER, the figure works out to a little over $6 billion. (via Carbon credits offer us a Rs 28,000-cr opportunity).

You can’t cheat a honest man!

This is a line from a 1939 movie of the same name.  It is a very interesting thought – and it is sometimes relevant.

Carbon credits is similar. The Developed World has spring a trap for the poor countries by dangling the carrot of ‘carbon credit’. Two years ago, 2ndlook had warned about the hazards of ‘token carbon credits’. Three months ago, a Quicktake on Climate Change detailed a part of the Climate Change game plan.

Indic justice versus Desert Bloc

One of the fundamental flaws of the Kyoto Protocol was the principal of ‘polluter pays’. Based the retributive justice logic, it was something that was bound to fail. Instead it should have been based on the Indic justice principle – ameliorative and make good. The operating principle should have been ‘polluter cleans and does not pollute again.’

If the ‘Developed World’ (I have no idea what that term means), made its wealth by pollution, waste and environmental degradation, do the world’s poor want that tainted money? Instead, the ‘Developed World’ should have been asked to clean up and mechanisms put in place to ensure that these ‘offenders’ do not repeat.

The carnival of spoils

Instead, Copenhagen has become a carnival where 20,000 delegates are fighting over the spoils of environmental degradation, pollution and climate hazard. The Indian Government has, of course, lost touch with Indian ideals – and are trying out their hand at Hammurabic justice.

The poor or the ‘common’ man, in whose name Copenhagen Climate Change meet is underway will not see any benefits. Copenhagen is for the rich (from poor countries), by the rich (from rich countries) to the rich (from poor and rich countries) – and may the poor and common be damned.

India – you cant win this game. The dice is loaded against you.

  1. Hema
    March 10, 2011 at 11:14 am

    So true.
    Recently I came across this peice of info which aptly confirms the murky scene behind carbon business oppurtunity in India. It is about a Bachat Lamp Yojana and private companies making crores and crores out of gullible common man.

    North Delhi Power Limited (NDPL), has announced the launch of Bachat Lamp Yojana for their consumers in Delhi. RWA NEWS had contacted NDPL for the details of this program and they informed us that they have tied up with a foreign company called C Quest Capital Malaysia, to sell these bulbs to their consumers and the bulbs would be manufactured by two companies HPL and Halonix. We had tried to seek detail information from the foreign company but there was no response from the telephone numbers available. RWA NEWS also contacted HPL to get more details on this program to inform the residents of Delhi about the participation in this program. The political class however is not bothered about the technicalities of the scheme because they think they are able to provide free or cheap CFL bulbs goodies to the people. It is therefore, important for people to know what information to have, precautions to take and how to participate in this scheme.

    Under this scheme, the households having valid electricity connections from NDPL are eligible to buy upto four CFL bulbs per consumer KNo. You will have to pay Rs. 15 per bulb, you existing ordinary incandescent old working bulb for buying a fresh CFL bulb of a capacity of 10000 hours of an approved BIS mark IS 15111 quality to the foreign company that comes to sell the CFL bulb at your door-step. You will also have to sign a document in favour of the foreign company which is also supposed to give you a receipt for this bulb in which the VAT and one year warranty (not guarantee) are included. It is a voluntary program and you are not forced to participate in it but if you decide to do so, it is important to know the procedures and the risks and the implications involved in the participation in the program.

    a) Why are they selling the bulb so cheap? A 10000 hours bulb is not available in the retail shops anywhere in India and should cost anywhere between Rs. 130 to Rs. 150 each. Then why is the foreign company just giving away four bulbs for just Rs. 60 instead of Rs. 600 ? The foreign company that is coming to sell the bulb to your door-step will be allowed to claim carbon credits for every bulb you purchase and use in your home. The company will then sell the carbon credits in International market for an good value and make profits. Each CFL bulb you use and pay the bill to NDPL for, is expected to generate around one carbon credit each. The carbon credits have been sold in the international markets for even Euros 22 each equal to Rs. 1430. Even in these recessionary days, the value of carbon credit is more than Euros 12 equal to Rs. 780 each. Therefore, by selling four bulbs to you, the foreign company would be able to claim carbons credits worth at least Rs. 3120 even at today’s prices. You are also paying Rs. 60 for four bulbs and four working ordinary bulbs for which you have already spent Rs. 40 at least.

    b) What is a Carbon Credit and its economics – It is a unit that has been defined by United Nations and is sold in the open international market. It is also called Certified Emission Reduction (CER). Mr. Mahesh Sharma , Engineer incharge of Bachat Lamp Yojana in HPL, a major CFL manufacturer in India, informed us that that the consumers that would buy the CFL bulbs will actually own the Carbon credits because they would be saving energy in their homes Mr. Sharma further explained us that the consumers would be expected to sign a ‘Deed of Consent’ wherein they would give away their rights over these carbon credits to the foreign company to allow it to sell them and make their profits. Therefore, with a simple calculation, it appears that the company selling the CFL bulbs will end up making a profit of more than Rs. 2500 from each consumer if they voluntarily buy four CFL bulbs from the foreign company sent to your door-step by NDPL. The consumer seems to be losing Rs. 625 per CFL bulb it buys in this scheme.
    It is not understood why NDPL is allowing such blatant profiteering in the name of Bachat lamp Yojana and carbon credits. NDPL seems to be either ignorant or is deliberately closing its eyes to this fact. If the foreign company distributes only one million bulbs to just 2.5 lacs consumers of NDPL, it would earn a profit of more than Rs. 62 crores whereas the NDPL consumers are the real owners of this money. NDPL needs to explain to its consumers how it would pay Rs. 62 crores back to its consumers because they are the ones paying the bills.

    c) Un-necessary paperwork for the consumers – While it is clear that if the consumers do not sign the deed of consent, the carbon credits cannot be claimed by anyone, NDPL informed us that it was a requirement under the scheme. But Mr. Sharma of HPL claimed that this was an ‘official’ requirement’ and he refrained from commenting how could it be handled unofficially. It is, therefore, NDPL’ responsibility to ensure that the consumers would not lose all rights over any revenue of carbon credits earned by the foreign company because the consumers are paying the bills for ever.

    Mr. Ajey Maharaj, Head of Group – Corporate Communications of NDPL, informed us that the foreign company is also giving a receipt for the value of the CFL bulb and the VAT is also included in it. No extra money is to be paid for VAT. Mr. Maharaj informed that the consumers could also pay by cheque or credit card but cash is preferred. Mr. Sharma from HPL, who would be sending their staff to the consumers’ homes, however, said that they would only give an ‘acknowledgement slip’ to the consumer and not a receipt and did not know anything about the consumer paying VAT and refused to collect the money by cheque or credit card. Mr. Sharma also informed us that the Deed of Consent is a legal document which the consumers have to sign. It is also assumed, that the value of the receipt to be given by the foreign company should be around Rs. 3220 for four bulbs that would include the value of the carbon credits of around Rs. 3120, Rs. 60 that you pay, and Rs. 40 for the working ordinary bulbs. This should include VAT payable to the Delhi Government according to the notification issued by the Government of India in January 2010.

    d) Consumers to be aware of the transaction with the Foreign Company – RWA NEWS was not able to find a local Indian contact detail for the foreign company on its website. NDPL informed us that the foreign company would be procuring the bulbs from HPL India and then sell them to its consumers. NDPL would be well advised to inform its consumers to check that they should get a valid receipt from the Indian subsidiary or a legal branch office of the foreign company with a registered VAT registration with Delhi Government, no matter if the consumer pays by cheque or cash or credit card. The local consumer cannot be expected to sign anything whether legal or not with any foreign company in India. NDPL has also informed RWA NEWS that it has not taken any financial guarantees whatsoever from the foreign company which is expected to make incomes and profits from this business.

    e) Identity Protection and Sale of the CFL Bulbs to consumers – Under this program, NDPL would be sharing the consumer data with the foreign company which may not have any future obligations towards the consumers. This data is being freely shared with the bulb manufacturers who are being sent to your door-step. Identity Theft is a major issue in the world today and appropriate steps should be taken to ensure that the consumer database is not mis-utilised.

    Mr. Sharma of HPL informed that they would sell the bulbs to anyone who is at home whether its a child or a servant. It is horrifying to learn that just about anyone can sign any document with the foreign company in your absence. Even though NDPL has claimed that the consumer would have to show an id and electricity bill to be able to buy these bulbs, it needs to devise a way to ensure that the CFL bulbs are sold to only the owner consumers of the connections. It may also come as a relief to our politicians to know that these bulbs are also being sold in the unauthorised colonies but NDPL should have done some good by using the revenues of carbon credits to improve the electricity infrastructure in these colonies.

    f) Dangerous Mercury Content of CFL Bulbs – NDPL has kept itself away from the legality of the sale of bulbs to its consumers by the foreign company. Since every CFL contains mercury, any little mishap of the bulb or breakage can be extremely dangerous to any human being. It can even cause death. The consumers will have nowhere to go in case of an accident anytime in the future. We are sure that NDPL knows that mercury can do to human beings what industrial gas could do in Bhopal. Appropriate steps should be taken to ensure that the people involved in the foreign company should be made accountable in case of any accident anytime in future and NDPL should ensure that its consumers are not taken for a ride.

    The consumers, therefore, need to be aware of the reality of Bachat Lamp Yojana and not buy the bulbs without looking at the details and the fine print. NDPL should ensure the consumers do not gullibly give away their rights of the high revenues of carbon credits. NDPL is expected to exercise its responsibility and it should not have an arm’s-length approach towards its consumers just because the consumers are going to voluntarily participate in the program. No such scheme should be allowed to be implemented without proper guarantees and precautions and full consumer education. The government should not make a mountain out of a molehill of the Bachat Lamp Yojana which is only a framework to claim carbon credits and it appears that the selling of the CFL bulbs is purely incidental.

    Read more: http://andhranews.net/India/2010/September/24-What-Consumers-Need-42231.asp#ixzz1GC610EbT

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