India CO2 credit revenue sharing plan stirs unease

* Indian law may force firms to share carbon offset sales

* Project developers opposed say would dim incentives

By David Fogarty

SINGAPORE, Aug 3 (Reuters) - Plans by India to force renewable energy developers to share up to half their carbon offset revenues could prove complex to administer and deter investment, carbon market participants say.

India's Central Electricity Regulatory Commission issued draft rules in May to harmonise the power price premium which state-owned distribution firms must pay for renewable energy.

The prospective laws would soften the extra cost of the premium by forcing renewable energy projects to share any revenue they earn from selling carbon offsets under a separate Kyoto Protocol scheme.

Under Kyoto's Clean Development Mechanism (CDM) companies in the developed world can invest in clean energy projects in emerging nations like China and India and get carbon offsets in return to help them meet domestic emissions limits.

"The thinking is that since the state-based electricity distribution firms have to pay a higher tariff to renewable energy projects, then they should at least get a share of the CDM revenues," said Vinod Kala, managing director of Emergent Ventures India, a leading clean-energy project developer and advisory firm.