New Delhi: Three companies had promised Rajeev Sadanand that they would invest in a scheme to replace old light bulbs with new energy-efficient bulbs across Kerala. But that was before December.

All three firms backed out of the project—which was depending on the sale of carbon credits to be viable—when developed nations failed to commit themselves to future carbon emission reductions at the global climate summit in Copenhagen.

“It was a big shock for us,” said Sadanand, chairman of the Kerala State Electricity Board (KSEB). “We expected a lot.”

He was eventually bailed out by state government-owned Energy Management Centre. But with few projects having such a backup, carbon consultancy, or the business of advising companies on the sale of carbon credits to developed nations, is floundering in India in the aftermath of the Copenhagen talks.

More and more carbon consultancies are planning to diversify into related areas such as advising companies on energy-efficient technologies, managing emissions and investing in renewable energy resources.

Under the United Nations’ clean development mechanism, or CDM, developed countries buy carbon credits—generic units to measure carbon emission reduction—from projects and companies in developing countries. India has been second only to China in sale of carbon credits (19.24% of the global total) and the number of projects that have sold credits (23.07%).

This scheme depends on developed countries’ commitment to reduce carbon dioxide emission and other so-called greenhouse gases, which scientists say are responsible for climate change worldwide. But developed nations have made these commitments only until 2012. As climate talks remain stalled, the future of trading in carbon emission reductions is uncertain.

“In Copenhagen, nothing headed towards closure. The first commitment period on emission reductions is only till 2012. Business-wise, most firms are looking at diversifying,” said Biswajit Pradhan, vice-president, Verve Consulting, a carbon consultancy.

Pradhan’s firm is now planning to offer technical advice to companies in various sectors on energy efficiency measures.

“We can make synergy with foreign companies for Indian companies. It would not necessarily be in track with carbon credits. Currently, there is a lot of work and scope within India. We are looking at more policy and regulation focus,” said Pradhan.

Shivani Maudgal Datta, senior consultant at Deloitte Touche Tohmatsu India Pvt. Ltd, is a touch more optimistic. “The market is uncertain. However, I believe till 2020, domestic markets in the EU (European Union), the US, Japan and Russia might keep CDM alive. However, definitely diversification is (the) key. We are all trying to do so.”

Domestic action on climate change, particularly on improving energy efficiency, driven by the National Action Plan on Climate Change (NAPCC), is also spurring this diversification.

“There has also been a sea change in (the government’s) attitude. It is starting to make business sense,” said Datta. “The NAPCC also is a reference to companies that GoI (the government of India) is becoming proactive and we need to start moving forward as regulations will come.”

The energy efficiency mission under NAPCC plans to start a “perform-achieve trade”, similar to CDM, by April. Nine sectors will need to achieve efficiency targets; they can then trade in extra credits. Both Pradhan and Datta said this has galvanized action.

Deloitte calls its carbon consultancy department carbon advisory and sustainability services.

“The idea is that we will diversify (into) new concepts like carbon management, carbon footprinting,” Datta said, referring to companies’ interest in measuring and managing their own emissions.

Ashutosh Pandey, chief executive, advisory, Emergent Ventures India, one of the country’s largest consultancies, said his firm is also looking at these areas for diversification.

“Companies see sustainability as (a) core issue now, and not just CSR (corporate social responsibility). We are helping many formulate strategies around this. We are also investing in renewable energy within India, which is easily one of the most attractive markets today,” said Pandey. “Even events want to go carbon-neutral by offsetting their emissions.”