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V Shunmugam, Chief Economist, Multi Commodity Exchange of India

Bio: Having been trained as an economist, I have been with the Multi Commodity Exchange of India Limited for the last three years working as the Chief Economist. I initiated the study of carbon markets to help MCX to launch carbon futures on its platform during early 2008. Besides, helping the MCX proving its thought leadership on carbon markets, I have also been interacting with various stakeholders to strengthen their participation on the MCX carbon platform and to help the Indian participants with the efficiency of its discovered prices and the transparency that empowers them.

What do you and your company do in the carbon markets sector?

Our company provides a platform for futures trading in carbon instruments to help the carbon market players with its price discovery and price risk management mechanism. I am responsible for analyzing the market data including that of carbon markets and to make the market participants aware of the market trends.

What do you consider to be the most interesting CDM developments and biggest challenges in India at this time?

Lack of transparency and national capacity building would remain the two biggest constraints for India to reap the full potential for emerging as the key player in the carbon markets. Innovativeness among the Indian players and increasing awareness are most interesting CDM developments in the country that could help sustain the initial momentum.

What do you consider to be the key factors which will affect the growth of the Indian Carbon Market?

• Increasing rejection of unilateral Indian projects i.e. keeping the science and the objective in front of political economics
• Emergence of ‘aggregators’ to mainstream the large number of SMEs in India
• Putting into action the National Climate Change Plan recently announced by the Prime Minister

How would you like to see things develop post 2012?

Parties to the Kyoto protocol should agree to a rational basis by which caps would be imposed on stakeholders. Emission being an externality of the economic growth process of the nations, all developed countries should agree to a rational basis by which caps are allocated and leave the rest to the market mechanism by allowing it to flourish with very few policy interventions into the markets. Nations which are not party to the protocol should become so that equitable sharing of burden happens to create win-win situation.