INTERVIEW - India, China seen partly out of carbon mkt post 2012

Smoke billows from a chimney of an industrial plant in Mumbai September 16, 2009.

MUMBAI (Reuters) - India and China, among the world's worst polluters, may lose some of their share in the international carbon market after 2012 while the United States could become the major buyer of emission offsets by then, a top official with a carbon advisory told Reuters on Tuesday.

The U.N.-backed Clean Development Mechanism, or CDM, rewards investors by issuing internationally tradeable carbon offsets in return for developing clean-energy projects in poorer nations.

The CDM is part of the Kyoto Protocol, whose 2008-12 first commitment period sets emissions targets for rich nations that drives demand for the offsets.

India is the world's second-biggest source of the carbon offsets, called certified emissions reductions, or CERs, under the scheme.

But with Asia's third-largest economy using more energy to power its growth, its share in global emissions are rising, triggering calls for the country to cut emissions.

"India and China may not be eligible to avail benefits under some projects after 2010...these are big emitters themselves and international buyers may insist on some sort of control," said P. Ram Babu, chief executive of General Carbon Advisory Services, which manages $300 million portfolio of emission reduction offsets.

Europe is the top buyer of CERs but Babu said if the United States managed to ratify a contentious climate and energy bill its share in emissions offset trading could go up substantially, leading to stiffer prices.

U.S. President Barack Obama will meet with senators on Tuesday to push for passage this year of a bill to fight climate change and revamp energy policy, the White House said.

The United States did not ratify the Kyoto Protocol, so it has no compulsion to cut emissions.

Benchmark Certified Emissions Reductions (CERs) were trading at 13.17 euros a tonne.

Babu said prices of CER in the spot market may range between 11-14 euros during 2010-2012 period, while in the forward market they may range between 10-12 euros during the same period.

Indian sellers usually prefer spot deals on hopes of better prices.

"Their perception is the future outlook for carbon prices is very good...why should they be committing?"

Nearly 70 percent of clean-energy project developers in India believe there will be a post-2012 successor to the U.N.'s Kyoto Protocol climate pact with binding emissions targets, according to a poll.

"India has already sold $1 billion emission reduction offsets ..as per conservative estimates we should be selling another $1 billion worth of offsets by 2012."

Babu said buyers are now looking at attractively priced offsets offered in Southeast Asia and Africa.

(Editing by Ramya Venugopal)

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