Malwa Industries, a part of the Ludhiana-based Malwa Group and a vertically integrated company producing denim fabric and garments for the Indian and international markets, has emerged as a player in this segment. The company began its journey towards adopting eco-conscious measures nearly two years ago and is considered to be a pioneer when it comes to alternate energy sources.
Malwa Industries experiment has now paid off as the company becomes eligible to sell the Carbon Credits it has earned by shifting to different sources of energy, in the international market. “We are negotiating with various quotes from different sources to trade our Carbon Credits now,’’ confirms President (Denim), Malwa Industries Ltd., Tarun Chawla.
[bleft]The output from the power plant is sufficient for the company’s garmenting, spinning and denim fabric plants.[/bleft]
Malwa Industries was able to earn these Carbon Credits after it reduced its carbon emissions substantially. It was among the first companies to set up a biomass power plant fueled by the burning of rice husks in north India. “The project was set-up with an investment of Rs 40 crore and commissioned in September 2006,’’ says Chawla. The company, which has a garment production capacity of 10 million pieces per annum and a fabric production capacity of 20 million metres per annum, has become eligible, over the year spanning 2007-08, for more than 32,000 Carbon Credits, as per the Kyoto Protocol Treaty. This will be valid for the next 10 years following the registration of its 6 MW Biomass (rice husk) based power plant with the United Nations Framework Convention on Climate Change (UNFCCC).
Carbon Credits, as defined by Kyoto Protocol, are one metric tonne of carbon emitted by the burning of fossil fuels. This is measured in terms of the number of megawatts versus emissions from a co-generation power plant and compared with that of a wind plant, which is a zero emission plant. One credit or Certified Emission Reductions (CERs) is equivalent to one tonne of emission reduced.
Carbon credits are a key component of national and international emissions trading schemes that have been implemented to mitigate global warming. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes between trading partners and around the world.
There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their price; voluntary units typically have less value than the units sold through the rigorously-validated Clean Development Mechanism.
Burning of fossil fuels is a major source of industrial greenhouse gas emissions, especially for power, cement, steel, textile, and fertilizer industries. The major greenhouse gases emitted by these industries are carbon dioxide, methane, nitrous oxide and hydrofluorocarbons (HFCs), which increase the atmosphere’s ability to trap infrared energy and thus affect the climate.
This growing concern with carbon emissions and the state of electricty in Punjab was what motivated Malwa Industries to begin looking at alternate energy sources, says Dy GM (Material) Sandeep Dahiya, who is responsible for sourcing all fuels for the group. “The power supply from the Punjab State Electricity Board (PSEB), was not of good quality. It was full of fluctuations and was inconsistent,’’ says Dahiya. “As a consequence, the losses in the company were higher, particularly during the summer months; there were peak load restrictions during the paddy growing seasons and one day of every week, manufacturers had to take recourse to High Speed Diesel generators, which were inefficient and emitted too much carbon dioxide,’’ he elaborates.
“That is when the company decided to set up its own power plant. We looked at various options. One was to go for diesel-run plants. The other was to use coal-based fossil fuels to run the boilers and turbines and generate steam. The latter was an attractive option because of its low cost but was high on carbon emissions. That is when we decided to look into running our power plant with rice husks,’’ he notes. Rice husks are the shells covering rice grains and are de-husked. They have no particular use but are renewable. The Government of India and that of Punjab, have been promoting their usage as a source of renewable energy to power manufacturing plants. “They do not emit dangerous gases and are completely safe unlike coal. They can be burnt to turn boilers and turbines to get power,’’ he indicates.
So, the company decided to set up a power plant in Ludhiana. The UNFCCC helped by compensating such companies by providing Carbon Emission Reductions (CER), which it measures in number of tonnes. The factory, certified by Bureau Veritas in March 2007, began acquiring these CERs, which it can now begin selling on the international market, particularly in Europe. “Companies can offset their own obligations by buying these from us,’’ says Dahiya. One tonne reduction of carbon emission earns the company one Carbon Credit and it earns it about Euro 15-17 right now in the market. “We have had enquiries from buyers in Switzerland and are negotiating,’’ he adds. Before this, we had accumulated VERs or Voluntary Emission Reductions, about 12,000 of them, which are traded at about 5 dollars each.
Other companies such as Trident, Nahar Industries and JCT have also begun using these rice husk-based power plants in a bid to reduce emissions and cut on power costs. “India is emerging as a serious player in the global Carbon Credits market and our effort will help clean the environment and also make us more competitive vis-à-vis our competitors,’’ concludes Chawla.