Torrent Power Ltd. (TPW), Adani Power Ltd. (ADANI) and JSW Steel Ltd. (JSTL) may be among the Indian companies most likely to benefit from climate change talks in South Africa that helped ensure the continuation of the UN carbon market past 2012.
The European Union, the world’s biggest carbon market, vowed to extend emission-reduction targets under the Kyoto Protocol that were set to expire in 2012. Those targets can partly be met through the UN carbon market, known as the Clean Development Mechanism, which awards tradable credits to companies that set up environmentally friendly projects.
“What has been most important for the markets is that at the end of 2012, the Clean Development Mechanism will continue in some form for another five to eight years,” said Jeremy Higgs, the Hong Kong-based managing director of Environmental Investment Services Asia Ltd., whose Green Dragon Fund invests in regional clean-technology companies. “That’s good news for those companies that do and could benefit from selling carbon credits.”
Torrent Power, Adani Power and JSW Steel own power plants and steel factories with emission-reducing equipment that are set to earn the most tradable credits in India up to 2020. They may win more than 77 million credits valued at about 400 million euros ($534 million) based on their Dec. 9 closing price, according to data compiled by Bloomberg.
Other publicly traded companies that earn money from selling credits from environmentally friendly projects in India include Greenko Group Plc (GKO), which is working with General Electric Co. to build wind farms in the South Asian nation, Orient Green Power Co. and KSK Energy Ventures Ltd. (KSK)
SRF Ltd. (SRF), Gujarat Fluorochemicals Ltd. and Navin Flourine International Ltd. have earned the most credits to date among Indian companies for projects that reduce industrial gas emissions. Those particular credits will turn into “junk” after 2013 without buyers because the EU has decided to ban them, saying they create “windfall” profits undermining the market, according to Geoff Sinclair, London-based head of carbon trading at Standard Bank Plc.
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