Tata completes first CDM offset project

Tata Power, the energy arm of Indian engineering giant Tata Group, yesterday announced that its 50MW Khandke wind farm has officially become the company's first Clean Development Mechanism (CDM) project.

The UN-backed CDM offset scheme allows carbon-reduction projects in the developing world to issue Certified Emission Reduction (CER) credits, which can be sold to governments or businesses in the developed world and counted towards their carbon-emission targets.

The Khandke project is expected to earn around 85,000 CERs annually from the United Nations Framework Convention on Climate Change (UNFCCC).

The move is the latest in a series of renewable energy investments by Tata Power, which said last month that it will install 150 to 200MW of additional capacity in Maharashtra and Tamil Nadu by the end of this year on top of its existing 200MW of wind energy capacity.

The project, in Maharashtra's Ahmednagar district, was commissioned in December 2007 and is the largest of the 50 wind projects registered under the CDM in the past two years.

The UNFCCC validation document shows that the projects is expected to prevent 83,022 metric tonnes CO2 equivalent from entering the atmosphere every year, the level that would be emitted if the same amount of power was generated using fossil fuels.

India is responsible for around 16 per cent of credits awarded under the CDM, second only to China worldwide. By 2012 it is expected to have earned almost $3bn of revenue through the CDM.

But the scheme has been widely criticised for being expensive and inefficient, while there have also been accusations that it has been poorly policed.

In particular, the scheme has recently come under fire for awarding credits for the construction of new coal-fired power plants on the basis that they emit less CO2 than other, less-efficient ways of burning coal.

A recent report by the World Bank criticised the CDM's structure, arguing that it had restricted it to a relatively small number of projects.

"The CDM has not moved developing countries onto low-carbon development paths," the report stated. "The incentive of the CDM has been too weak to foster the necessary transformation in the economy, without which carbon intensities in developing countries will continue to increase."