Microfinance

Basix secures 2.5 million euros for carbon credits in solar heater project

Basix, the Hyderabad-based conglomerate of financial and knowledge-based social enterprises, has helped more than 15,000 households, hotels and other small units in Maharashtra, Gujarat and Karnataka earn a cumulative 2.5 million euros in a landmark carbon credit deal involving solar water-heaters

CTRAN, a BASIX group company, has structured a 2.5 million euro deal wherein micro carbon credits obtained from migrating households, hotels and other small units to solar water heaters have been contracted for sale in the global clean development mechanism (CDM) market over the next ten years (November 12, 2010 to November 11, 2020). The project is expected to lead to a saving of 27.87 million units of electric energy and emission reductions of 22,746 metric tonnes carbon di-oxide equivalent per annum.basix carbon credits

Significantly, this project is unique and a first-of-its-kind from India to be registered with the United Nations Framework Convention on Climate Change (UNFCCC).

In the CDM process, projects are first registered in a central registry which verifies the technologies being used and validates the claim of emission reductions. Once the project is validated, the stream of carbon emission reductions (CERs) can be sold by the parties making the carbon emission reductions, and are purchased by parties which have been identified with a responsibility of reducing emissions. In the Kyoto protocol, the latter companies could postpone moving to more environmentaly friendly technologies by buying out carbon credits in the interim.

The CDM is therefore a market intervention whereby environmentally friendly projects can trade their reductions with companies which need to reduce but are unable to transform fast enough.

About the project

The proposed project activity is an aggregation of solar water heater (SWH) installation at household, commercial, institutional and industrial facility to cater the low temperature hot water requirement. The project is based on the principle of utilisation of renewable energy (solar radiation received on the earth surface) to heat up ambient water to suffice the low temperature hot water requirement. Installation of SWH will substitute usage of electrical heaters used/to be used as the baseline options.

The project will result into:

  • Enhancing Penetration of Solar Water heaters: There are substantial barriers to Solar Water heater Technology that is preventing its penetration or diffusion. Among the most pervasive barriers preventing the diffusion are related to high upfront investment, non supportive public policy framework, weak institution, lack of promotion and technological failure1. The purpose of the project activity is to introduce carbon finance as a vehicle towards providing incentives necessary to enhance the penetration of SWH system.
  • Reducing Green house gas emission and abate environmental pollution by refraining from the use of electric energy for water heating.
  • Electrical Energy conservation thereby resulting in conservation of primary energy sources (fossil fuel).
  • Enhance the investment environment for solar thermal market

The solar water-heater project is one more example of how Basix’ business model is markedly different from other microfinance institutions. Instead of merely doling out small loans to the poor, Basix is engaged in livelihood promotion and financial inclusion of the poor of India, who have no recourse to bank credit. The 2.5 million euro windfall will certainly go a long way in livelihood promotion across villages in Maharashtra, Gujarat and Karnataka.

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