Upsetting the Offset - Transnational Institute

Upsetting the Offset
Development Mechanism (CDM). This is how the company introduces itself
and its carbon trading product on its website:
GFL is amongst India’s largest refrigerant gas manufacturing company. In the
course of manufacture of HCFC22 (a coolant widely used in air-conditioning
and refrigeration applications), HFC23 is generated as a waste product, which is
a potent greenhouse gas, with a global warming potential equivalent to 11700
MT of carbon dioxide. As a part of GFL’s larger business plan to create a
sustainable future, it is one of the few companies in India involved in Carbon
Trading. Of the 15 projects approved by the United Nations Framework of
Climate Change Convention (UNFCCC) so far, four are Indian and GFL is one
of them. It has today the technology in place to bring down the emission levels
of greenhouse gases and sell certified emission reduction credits (CERs) to
developed countries. GFL is setting up a project for Greenhouse Gas Emission
Reduction by Thermal Oxidation of HFC 23, at Gujarat in India. This project
has been registered by the Executive Board of the Clean Development
Mechanism (CDM), established under the Kyoto Protocol. Apart from being the
largest project in India, it is also the first Indian & third in the world to be
registered as a CDM… GFL expects to generate more than 3 million tones of
CERs annually, which is expected to go up in the future as HCFC22 production
grows. These CERs can be traded internationally and can be used as a
compliance tool under the Kyoto Protocol as well as several other trading
markets like the EU Emissions Trading Scheme. Trade in compliance grade
emission reductions is expected to grow to ! 10 billion per year by 2008,
according to industry estimates. 5
GFL’s CDM project is thus to do with the destruction of HFC23, which is a
very potent greenhouse gas, using the process of thermal oxidation. The
technology for the thermal oxidation of HFC23 has been imported from a UK
based company called Ineous Fluor Limited. The other key players involved in
the CDM project are: Cooperatieve Centrale Raiffeisen Boerenleenbank B.A.
(Rabobank), Netherlands, Sumitomo Corporation, Japan, and the Government
of India. Rabobank is the mediator between GFL and the Government of the
Netherlands for the purchase of CERs produced from the project. Sumitomo
Corporation provides operations and maintenance assistance through Daikin
Industries (Japan), and it also facilitates the sale of CERs in Japan. The
Government of India acts as the Designated National Authority (DNA). The
Project Design Document (PDD) has been prepared by the Mumbai office of
PricewaterhouseCoopers (PwC). The PDD is the most important publicly
available document outlining the CDM project’s aims and objectives, including
its technical design, contribution to emission reductions as well as its
environmental impact, socioeconomic benefits and contribution to sustainable
development.
As far as sustainable development is concerned this is what the PDD has to
say about the project’s contribution to sustainable development:
GFL has expressed its strong commitment to the sustainable development
activities by committing a total fund of Rs. 7 Crores (Euro 1.375 Million)
approximately for the life of the entire CDM project out of the revenues
received if the project is approved and once there is revenue stream from sale of
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