Carbon Disclosure Project (CDP) may be a UK-based non-profit, but its global in terms of work and influence for maintaining the largest inventory of carbon emissions of businesses. CDP is backed by biggest global investors, including HDFC, IDBI, IDFC, IndusInd Bank, Reliance Capital, Tata Capital and Yes Bank from India, which are managing assets worth $71 trillion. In an email interview with FEs Rajiv Tikoo, CEO Paul Simpson puts in the larger global perspective the growing trend of climate-proofing by companies in India. Excerpts:
What were the most important findings of the CDP India Report 2010?
In the 2010 report, we saw a 37% increase in the number of responses from Indian companies, which shows there is a growing awareness and engagement on measuring and managing carbon. There was over 120% increase in companies accounting for their greenhouse gas (GHG) emissions. And the reported emissions increased over 200%.
What is the reason behind the encouraging response of companies in India in contrast to the lacklustre performance of the global carbon market?
The drivers for companies to take action on climate change are by no means just related to the global carbon market. Clearly the outlook for the global carbon market is uncertain in the absence of a new global agreement on climate change. However, we see that companies are taking action to measure, manage and reduce GHG emissions and understand what climate change means for their business to improve efficiency and reduce energy use and therefore costs; to ensure they are seen as responsible businesses, which is important in the global market place and can benefit the brand and lead to increased business; and to better understand how they can adopt the latest technology in their systems, processes and products.
Besides, Indian companies are influenced by many things other than the carbon market. The government has launched several flagship programmes to encourage low carbon/green development including the Jawaharlal Nehru National Solar Mission and the National Mission for Enhanced Energy Efficiency.
At the same time, Indias companies are jittery due to the uncertainty about the post-2012 CDM market. How do you foresee the CDM market if there is no UN backed legal framework after the fist phase of the Kyoto Protocol?
Clearly the outlook for the global carbon market is uncertain in the absence of a new global agreement on climate change. However, the EU has already made very clear that the EU Emissions Trading Scheme (EU ETS) will continue to at least 2020 and will bring in further sectors such as aviation. Given that the EU ETS has been driving the greatest demand for CDM, I expect that the CDM market will continue.
Steelmakers like ArcelorMittal and Tata Steel are opening a legal fight against EUs interpretation of forthcoming carbon dioxide emission rules, which they say give unfair competitive advantage to steelmakers in other parts of the world. Do you see more such disputes coming up as the nations and blocks focus on localised solutions in the absence of a global treaty?
One of the greatest factors to slow action on climate change by governments is corporate lobbying against such action. Generally companies dont want to have any new regulation in a country where they operate that may increase costs. However, companies are going to have to accept regulation to reduce emissions at the rates the science demands if the market will not deliver these voluntarily, which it is not doing at the moment and doesnt look likely to do in the short term.
The absence of a global treaty on climate change is likely to result in more national and regional regulation, which will be more diverse in nature than a global treaty. This will create significant challenges for multinational companies and investors who operate across many jurisdictions. There may be more disputes such as this, but I would like to see leading companies such as ArcelorMittal and Tata Steel put their energy into lobbying all the governments where they have operations for a global deal on climate change in order to create a global carbon market to avoid situations where companies in any one country may have an unfair advantage because of climate change policy at that time.
The renewable energy market is picking up faster in countries like India. Do you see a paradigm shift in the approach, which is shifting from reducing emissions to deploying clean energy to fight global warming?
Energy security and climate change have become strategic issues for all countries and companies, even if they are not yet acting on these issues. Emerging economies such as India are requiring increasing amounts of energy and with rising fossil fuel and other commodity prices clean technology is essential to meet this demand. As fossil fuel prices rise, renewable energy is becoming more economical.
Source: The Financial Express
Published on 4 May 2011