Carbon Credits and Offsets: Global Mechanisms and India’s Reality
1. What are Carbon Credits?
- Definition: A certificate representing 1 ton of COâ‚‚ avoided or removed from the atmosphere.
- Purpose: Allow emitters to offset their emissions by funding reduction projects elsewhere.
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Types of Markets:
- Compliance Market: Regulated by law (e.g., Kyoto Protocol, EU ETS)
- Voluntary Market: Companies/individuals offset for ESG or reputational goals
2. How Do Carbon Credit Projects Work?
Key Requirements:
- Additionally: Project must go beyond "business as usual"
- Baseline: Estimate of emissions without the project
- Permanence: Carbon stored must not be re-released quickly
- Leakage: Emissions must not shift to another location
- MRV: Monitoring, Reporting, and Verification
Common Project Types:
- Renewable energy
- Reforestation/agroforestry
- Methane reduction (biogas, cookstoves)
- Wetland restoration
Certification:
- By international registries (e.g., Verra, Gold Standard)
- Sold via brokers/platforms
3. Global Carbon Market Snapshot
| Region | Status | Credit Price (per ton) | Coverage |
|---|---|---|---|
| European Union | Active | ~$90 | 37% of EU emissions |
| China | Active | ~$11.74 | Allows some offsets |
| South Korea | Active | ~$6.40 | Allows some offsets |
| India | Under development (CCTS) | – | Domestic market in progress |
Market Size:
- 2021: $2 billion (voluntary market)
- 2030 (projected): $50–100 billion
4. India’s Role in Carbon Markets
- Top supplier in voluntary markets
- ~1,700 projects registered under international mechanisms
- Upcoming Carbon Credit Trading Scheme (CCTS) under Energy Conservation Act 2022
Common Projects in India:
- Agroforestry (e.g., Mahogany in Bastar)
- Improved cookstoves
- Biogas distribution
- Alternate wetting and drying (AWD) in rice farming
- Wetland restoration
5. Ground Realities: Critiques and Failures
Key Issues:
- Overstated Impact: 90% of Verra-certified forest offsets had no real climate impact (2023)
- Greenwashing: Companies like Disney, Shell, Gucci bought questionable credits
- Exploitation: Farmers and communities often underpaid and excluded
Case Studies from India:
A. Mahogany Project in Bastar
- Farmers promised 50% revenue share → received only 12%
- No understanding of carbon contracts
- No real monitoring → used default values
B. Biogas and Cookstoves (MP)
- Devices broken or unused
- Credits sold without verification
C. AWD Paddy (Telangana)
- Farmers adopted technique but received no payment
Common Flaws:
- Lack of transparency
- No local involvement
- Weak MRV
- Corporate profit over community benefit
6. India’s Upcoming Carbon Credit Trading Scheme (CCTS)
Concerns:
- Will it be compliance-based or voluntary?
- Who will verify projects?
- How will small producers access the market?
- Will it ensure equity and justice?
Need for:
- Better accounting
- Fair contracts
- Local governance
- Community participation
7. Key Takeaways
- Carbon markets have potential but are prone to exploitation
- Justice and equity must be central to carbon credit design
- Local communities should benefit fairly from carbon projects
- Strong regulation and transparency are essential
📘 Exam Tip
Understand the mechanics of carbon credits (additionality, baseline, MRV) and the difference between compliance and voluntary markets. Use Indian case studies (e.g., Bastar, cookstoves) to critique real-world implementation—focus on equity, transparency, and community impact. Discuss the potential and pitfalls of India’s CCTS, emphasizing the need for inclusive and verifiable carbon markets.