"Thus, we can earn revenue at global rates after making investments in Indian rupee terms," she said.
GTZ CDM-India is a bilateral programme of Germany and India implemented through Bureau of Energy Efficiency of India and German Technical Corp.The agency has tied up with Central Electricity Authority, National CDM Authority, central and state governments, and public and private firms to develop the Indian carbon market.
According to Bhat, it is a blessing in disguise for Indian firms that many developed countries, in their search for cheap and risk-free credits, chose not to invest in India.
"So, Indian companies invested their own money into projects and this has enabled them to reap the benefits of higher prices via bilateral agreements when prices rose," she said.
The good track record of Indian firms in delivering credible certified emission reductions (CERs) or carbon credits have also ensured that Indian CERs get high prices globally.
Bhat estimates the investments in Indian clean development mechanisms (CDMs) at nearly Rs 1.06 lakh crore until now and expects them to rise.
"India has consolidated its leadership position in terms of host country-approved CDM projects. Till date, 969 projects have got the government's approval.
The estimated CER volume reaches 492 million (until 2012) if they successfully register at UNFCCC (UN Framework Convention on Climate Change)," she said.
India is also the global leader in terms of registered projects with a total of 346 projects. CERs have already been issued to 225 projects.
The majority of registered projects in India are renewable energy projects focusing on hydro power and wind energy.
Bhat said that despite China having higher CERs due to large number of hydrofluoro carbon reduction projects, the concept has caught on better in India than in China.
"Even Indian companies like SRF and Gujarat Fluorochemicals have earned high number of credits due to HFC reduction projects. It is unlikely that approvals for such projects will continue post-2012, though China has been pushing for it," she said.
For reducing every 1 tonne of HFC, 11,700 CERs are issued as compared to one CER issued when 1 tonne of carbon is reduced.
Bhat warned against the "gold rush" like behaviour of some market participants and said project stakeholders should be careful when selecting project participants and consultants.
She also said that such a mentality could lead to faulty or incomplete project reports being submitted, which will lead to delays in approvals and validations and run a high risk of being rejected by UNFCCC.
"If the period between host approval and submission of validation report is too long, it leads to concerns over the real benefits of the project, which can even lead to rejection by the UN CDM Executive Board."
In the pipeline
Programmatic clean development mechanisms that involve emission reduction for mass-based programmes hold great opportunity for Indian small and medium enterprises, said Bhat.
"Programmatic CDMs will be the major vehicles for attracting SMEs to the potential revenue that can be earned by way of carbon credits by reducing emission," she said.
Another norm being worked on is setting a baseline emission per sector, which will lead to automated approvals for those projects below the base line.
Bhat believes that each individual has a moral responsibility to cut greenhouse gas emission, and CDM provides the opportunity to earn revenue while doing that.
"Climate change is the biggest challenge faced by humanity and with CDM we can try and tackle this issue," Bhat said.