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ENVIRONMENT
NUNTAWUN POLKUAMDEE & DARANA CHUDASRI
The global carbon credit market offers booming opportunities for local industries, as demand worldwide will only rise in the future under the Kyoto Protocol, according to local financial experts.
Potential demand for carbon credits is projected to rise twofold over the next several years, as the Kyoto Protocol calls for participating developed nations to cut their greenhouse gas emissions by 5% below 1990 levels by 2012.
A key element of the pact is how countries can purchase carbon credits from financial exchanges or qualified projects to help meet their reduction targets.
Wannawut Apinanratanakul, a senior vice-president of Tisco Securities, said that while the carbon credit market was very much in its infancy in Thailand, the potential was massive.
The Thailand Greenhouse Gas Management Organisation (TGO), a unit under the Natural Resources and Environment Ministry, is the main clearing house for the carbon credit market in Thailand.
Since its establishment last year, 38 projects have been approved to date, with another 26 in the pipeline, according to Prasertsuk Chamornmarn, the TGO deputy executive director.
She said the TGO was preparing to propose that the government approve tax incentives for carbon credit projects.
Mr Wannawut said interest among local banks to finance carbon credit projects was growing steadily, while brokers were positioning themselves to act as brokers between project developers and carbon credit buyers.
The cement, biogas, biomass and sugar industries all offered strong opportunities to develop carbon credits, he said.
''For Tisco, we currently have 10 clients interested in carbon credit projects, with potential production of 20,000 to 100,000 tonnes per year,'' Mr Wannawut said. Carbon credits are currently traded at prices ranging from 10 to 20 per tonne.
A small project, he said, producing 20,000 to 50,000 tonnes in credits per year, could involve an investment of 100 to 200 million baht. The life cycle for a project would be at least a decade, offering plentiful opportunities for companies to recoup their investment.
He said demand for credits was expected to remain high over the next several years, particularly as the United States, the world's largest economy, was likely to eventually join the Kyoto Protocol as public awareness about the dangers of global warming increase.
Natee Sithiprasasana, chief executive officer of AT Biopower, said the clean development mechanism (CDM) had helped give the company additional cash flow. The company runs a 22-megawatt thermal power plant using rice husks as a feedstock.
Mitsubishi Securities was the consultant for AT Biopower's CDM application, with up to 70 companies from around the world invited to bid for the firm's carbon credits. AT Biopower shareholder Chubu Electric Power, Japan's third largest electric company, won the bid with a price of more than 10 per tonne, fixed through 2012.
Somchai Nitikanchana, managing director of S.P.M Feed Mill, the operator of 17 swine farms in Ratchaburi, said he now had three CDM projects in operation. The first sells credits to the government of Denmark at $4 per tonne, with another two sold to the UK's Eco Securities at 4.5 per tonne.
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