Facts for Prelims (FFP)
Source: BS
Context: The Uttar Pradesh government has launched an agroforestry project in partnership with The Energy and Resource Institute (TERI) to link farming with the global carbon credit market and generate additional rural income.
About the carbon credit market:
| Information | |
| Definition | A carbon credit is a permit allowing the emission of one ton of greenhouse gases per permit. They are periodically awarded to companies contributing to pollution in order to limit their emissions while allowing them to sell the extra credits to another company that needs them. |
| Trading Mechanism | Allowance-based: regulated entities receive a certain number of allowances (credits) for emissions; can buy and sell this o meet compliance obligations or generate revenue through excess credits |
| Offset-based: voluntary offsets created by emissions reductions projects (e.g., renewable energy) that are verified, registered, and sold to companies or individuals looking to reduce their carbon footprint | |
| Market Size | Global market estimated to be worth $60 billion in 2021, expected to reach $100 billion by 2030 |
| Types of Credits | Certified Emissions Reductions (CERs), Emission Reduction Units (ERUs), Verified Emission Reductions (VERs), Renewable Energy Certificates (RECs), etc. |
| Benefits | Encourages emissions reductions and sustainable practices, generates revenue for companies, creates opportunities for investment in emissions reduction projects, contributes to global climate goals |
| Challenges | Ensuring accuracy and reliability of emissions measurement and verification, preventing fraud and double-counting, establishing clear standards and regulations, addressing concerns around offset quality and additionality |
| India’s position | India is among the top producers and exporters of carbon credits in the world |
| India’s Green Target (INDC) | Reducing GHG emissions by 45%, generating 50% of its power from renewable energy sources and reaching net zero emissions by 2070. |
Read about Draft Carbon Credit Trading Scheme
