i Develop Stocks Advisory

Ispat, JSW line up plans for carbon business

Thursday, January 24, 2008

Steelmakers like Ispat Industries and JSW Steel are planning to cash in on carbon credit incentives, by recycling waste gases into energy fuels.

Ispat Energy, the wholly owned subsidiary of Ispat Industries, is targeting a generation of 6-8 lakh carbon credits from its 110 mega watt captive power plant at Dolvi, which will be fired by waste gases from its blast furnace. JSW, on the other hand, will derive 7.6 million carbon credits over the next ten years. Both the companies have major plans which include setting up more power plants running on such fuels.

Ispat's Dolvi power project is expected to be operational by the end of this calendar year. The company is hopeful that this project will be registered with the United Nations Framework Convention on Climate Change (UNFCCC) as a clean development mechanism (CDM) project, and thus generate carbon credits.

"Carbon credits will be generated after the plant is operational. We hope to sell them in the market to earn an income," said Ispat Industries executive director (finance), Anil Sureka said. Ispat Energy has already tied up finances for the Dolvi captive power plant and project activities have commenced.

Seshagiri Rao, director finance at JSW Steel, said, "We have already registered one of our units with the UNFCCC. As and when we firm up our plans for the other project, we will apply for those as well." JSW has already sold 7.6 lakh carbon credits to record an additional income of around Rs 111 crore in the second quarter of the current financial year.

Iron and steel comprise around 15% to the overall GHGs emitted globally. India, which produces over 38 million tonne of steel, forms merely 3% of the total world production. However, given the high economic growth rate of the country, it is an important part of the global steel industry. With the rise in global concern about climate change, the International Iron and Steel Institute, for the world steel industry, has drawn a routemap for carbon emission reductions as part of post-Kyoto regime.

The objective is to continue research and development efforts towards breakthrough technologies, draft legislations or regulations to legally implement and enforce commitments in individual member countries, and engage individual member countries in negotiations.

Going forward, the plan will also identify with projected carbon reduction expected by entire global steel industry by 2020 or beyond.