JSW extends lead as main steel beneficiary of carbon trading

With the first commitment period of the Kyoto Protocol coming to an nd next year, investment in some key emissions reduction schemes has been reduced. The Clean Development Mechanism can continue in name beyond Kyoto, but in practice it relies on investment by private companies interested in selling carbon credits. The market for these credits is in turn dependent on demand created by national emissions reduction targets. Companies, such as Indian steelmaker, JSW, who have been able to attract significant investment through the clean development mechanism should be eager for the next round of climate negotiations in Durban later this year to introduce a temporary extension to Kyoto.

SBB 18 July Indian steelmaker, JSW Steel, has been awarded a further 549,409 Certified Emissions Reduction Credits (CERs), bringing its total to almost 7.9m CERs, with a market value of over $110m, Steel Business Briefing learns from United Nations data. This cements the company’s lead as the steel industry’s main beneficiary of the UN’s Clean Development Mechanism (CDM).

The CDM is designed to encourage investment in reducing greenhouse gas emissions. Carbon credits are awarded to projects which reduce emissions. These can be sold to facilities which need carbon credits to meet their emissions requirements, for example under the European Emissions Trading System (ETS). This guarantees a certain level of income from the investment, allowing for cheaper financing.

JSW has earned by far the largest number of credits in the Indian steel industry: 7.9m out of a total 10.2m CERs. India and China together dominate the steel segment of the CDM, accounting for almost 96.5% of CERs awarded to the steel industry, SBB calculates.

Although JSW has earned the most CERs, it is the only non-Chinese steelmaker to earn over 1m CERs and Chinese companies have been gaining ground.


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