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Saturday, 17 June 2006 12:06

Emissions trading creates outsourcing boom

ImageBangalore: What has emissions trading got to do with outsourcing? It has quite a bit to do with it, judging by the amount of interest being generated in the outsourcing circuits.
The latest entrant is Enzen Global, an Indian start-up founded by three former Wipro staff, gingerly stepping into this newly emerging services space.

Emissions trading is a system that allows countries to "buy" or "sell" emissions that come from say a manufacturing plant or a refinery or any other utility that emits poisonous gases which can cause innumerable health, climatic and environmental problems.

It works this way: Say, in a power plant, gas emission from the stacks (those tall protruding pipes or chimneys) is measured with the help of analysis instruments from companies like Rockwell, ABB, etc. The data from these analyzers helps to calculate the total emission (in tones) and this is passed on to government authorities (like the state pollution control board in India) every month. (Incidentally the emissions after treatment are released into the atmosphere)

Although firms in financial and energy trading like US-based SunGard and consulting firms like CapGemini and Indian services companies such as Wipro Technologies also offer consulting and services in this space, the complete automating and outsourcing of emissions trading is taking on a new hue.

Bangalore-based Enzen Global, which claims to be the first of its kind from India to offer pure play emissions trading services, has already bagged two outsourcing contracts from EU where it would provide outsourcing services to those who are trading emissions. The rest of its portfolio also includes large software program management and financial services.

If a manufacturer (or a country) has high emissions which exceed the prescribed norms, the manufacturer has two options - either pay a penalty or buy equivalent credits from a non-pollution source. It can also choose to set up a non polluting source itself and do an internal offsetting like setting up a bio fuel plant or wind power plant.

The trade results in hard dollars/rupees for non polluting companies whereas for polluting companies it gives flexible mechanism to control penalties on pollution. Point Carbon, a leading analysis and research firm for power, gas and carbon emissions says that  global emissions trading  is likely to reach 34 billion euros in 2010 as against 2.5 billion euros forecast for 2005.

“Previously there was no concept of trading. Some were exceeding emission limits whereas others were within norms. Now, those with credits (as they are within norms or have eco friendly methods) can exchange the same with others for hard cash or other assistance. For example, the farmers in Andhra Pradesh can trade their credit coming out of the use of bio-fuels or organic farms which are less polluting,  with an European country/company which uses petro fuels which are more polluting,” explains Satheesh CEO, Enzen Global.

Outsourcing the whole process of emissions trading is the new-age way of doing things.  Today, while most of the organizations which trade emissions have in-house processes, companies like ESP and Pavilion Technologies have come out with customized packages while companies like Enzen are taking the outsourcing route to manage emission trading on a real time basis.

The global market for emissions trading is estimated at $500 million global emissions trading market. Although no government statistics are available as to how much of emissions trading goes on in India, industry figures estimate it at $40-50 million a year, according to Point C.

“We intend to track emissions in real time in a facility, manage emissions credits (credits  which one country/company gives to another while trading)  and produce a slew of compliance reports required by the state and other regulatory bodies,” he pointed out.

In any industry where emissions are regulated and traded, delays can be costly. Every minute out of compliance and monitoring function can impact the bottom line. “Today we need solutions that take environmental data to newer levels of efficiency and these should be in real time,” explains Shashank Garimella, energy group, Enzen.

At present, the process of data collection is normally quite automated in many plants but reporting isn’t simple and accurate and that is where IT comes in, especially when you have to trade these emissions globally too. “There is an increasing demand from the market on the Kyoto protocol compliance and for risk management advice,” Kristian Tangen, Director Research and Advisory, Point Carbon has said in a recent research report.


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