REC trade result – December 2018

The december trading session saw a good price discovery for both solar & non-solar RECs. The market saw a significant price hike in solar as compared to last month. The demand for both solar & non-solar remained consistent while the supply remained limited. As we approach the year-end, the obligated entities are in the process to comply with their obligations and hence the higher demand in order to not face any penalties for non-compliance. However, the highlight of this month’s trade was that solar crossed the floor price of INR 1,000 and reached at INR 1500 at PXIL and INR 1450 at IEX.

Non-Solar: This session the RECs were traded at the price of INR 1255 at PXIL (25.5% above the floor price) and INR 1320 at IEX (32% above the floor price). A total of 3,82,400 RECs were traded in this session leaving an inventory of 21,52,097 Non-Solar RECs. (However, a significant portion of these do not participate in trading as they would either be owned by Discom’s or are for self-retention).

Solar: Total number of solar RECs traded in this session was 1,77,247 (201% increase from the last months’ trade). The clearing ratio was 100% at PXIL & 100% at IEX respectively (w.r.t floor price). RECs traded at the floor price, i.e. INR 1500 at PXIL (50% above the floor price) and at Rs 1450 at IEX (45% above the floor price).

The overall trade volume (5,59,647 RECs) increased by almost 10.65% from the last months’ trade volume (5,05,738 RECs).

INDUSTRIES WILL BE ABLE TO TRADE EMISSION PERMITS OF PM 2.5 VERY SOON

For a developed country, the one debate that always remains when considering emission control is the impact it will have on the economic development. To solve this problem in a country like India where industrial development is unavoidable, Niti Ayog is planning to put a cap on PM 2.5 emissions from industries. Under this scenarios there may be industries which which will find it easier to comply with the limits and ones for which it will be challenging. Therefore, they are proposing a trade of emission permits of PM 2.5.

 

Those industries which will be able to reduce more than the desired limit will be able to trade their emission permits to those industries which will not be able to reduce emission to the desired limit. This is going to be a way of ensuring continued economic growth along with emission reduction. It is being proposed that the Central Pollution Board of India (CPCB) will be able to keep a track of the emissions by implementing continuous emission monitoring systems. China has also started carbon trading recently for the same reason.

 

Cap and trade has been used for other GHGs and in other countries to reduce harmful emissions. This seams to be a great way to encourage emission reduction since it involves trade and therefore, competition among industries of various kinds without hampering their growth.

 

Our previous analysis which talks about climate change mitigation and industrial development can be accessed here. The article covering the news about the same can be accessed here

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