Context: The voluntary carbon market (VCM) has witnessed significant growth globally, with India emerging as a key player in carbon offsets. However, certain complexities and challenges undermine its effectiveness.
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The VCM is a complex system involving various entities to ensure carbon offset projects effectively mitigate greenhouse gas emissions.
Carbon credit pricing is determined privately between buyers and sellers, often lacking alignment with decarbonization goals.
Registries establish standards, verify projects, and issue carbon credits based on emission reductions or removals.
Major registries include Verified Carbon Standard (VCS), Gold Standard, American Carbon Registry (ACR), and Climate Action Reserve (CAR), each facilitating credit trading.
Issues in the Market:
Pricing in the VCM lacks a standardized basis, resulting in inflated or insufficient prices that can render projects economically unfeasible.
There’s criticism that the market primarily serves the interests of developers and auditors without effectively reducing emissions.
Some companies using purchased credits continue emitting or even escalate emissions, rendering the claimed reductions ineffective or fictional.
Scenario in India:
India lacks a government database tracking carbon credit projects, with this data residing solely with global registries.
Several Indian entities, including EnKing International, Jaiprakash Power Ventures, and Himachal Baspa Power Company, rank among the top developers.
India boasts 1,451 implemented projects, attracting interest from Western industries aiming to offset emissions.
Regulation and Accountability:
Globally, efforts to regulate and hold the VCM accountable are ongoing. However, effective international rules are necessary to regulate the market.
India needs regulatory measures ensuring the VCM contributes to national climate goals.
The VCM’s expansion, including India’s active participation, highlights the need for standardized pricing mechanisms and enhanced accountability. Addressing these issues is crucial to align the market with global climate objectives and ensure its effectiveness in curbing emissions.