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Vol. XXXI No. 17, December 16-31, 2021
GCC & CSCL announce plans to trade in carbon offsets
by our Special Correspondent
According to a recent news report in the New Indian Express, the Greater Chennai Corporation (GCC) and Chennai Smart City Limited (CSCL) are joining hands to trade carbon offsets in the international market. This means that they would aim to monetise sustainable civic projects that directly reduce or remove carbon emissions by turning them into tradable assets. For example, one carbon credit is generated when a project has avoided the emission of one metric tonne of greenhouse gases; accumulated credits can then be sold to companies, serving as permits that allow them to generate the amount of greenhouse gases represented by the value of the carbon credit trade while reducing their net carbon emission metric.
An understanding of the larger picture is perhaps necessary to discern the possible importance of such a move for the city. India is said to be the third-biggest carbon emitter after China and the US, though the per capita number is calculated to be around seven times lower than that of the US according to various studies, including one by the World Bank. However, Chennai is one of the cities in India where the per capita greenhouse gas emissions fall in the higher category, a metric that the city must bring under control given that coastal areas are believed to be at greater risk from the hazards of climate change. In fact, a 2020 modelling study carried out by IIT Chennai warns that high carbon emissions will likely create the conditions for extreme rainfalls and greater incidences of flooding in the city, bigger perhaps than the event of 2015.
In the light of the above, the GCC-Smart City initiative to trade in carbon offsets is a welcome strategy – the ability to monetise sustainable projects is a powerful incentive to commit to green initiatives, for it empowers civic bodies to raise fresh funds from the market. The revenue-generating potential of carbon trading is significant. In 2020, the Indore Municipal Corporation was reported to raise Rs. 50 lakhs by selling carbon credits that it earned by preventing the emission of 1.70 tonnes of carbon dioxide through its bio-methanation plants; it had registered its projects under the Verified Carbon Standard (VCS), a voluntary emissions reduction standard that is reported to be the world’s most widely used carbon offset programme. Earlier this year, Delhi Metro Rail Corporation issued a press release that it had earned Rs. 19.5 crores from the sale of 3.55 million carbon credits that it had amassed over a period of six years from 2012 – 2018; the body had registered itself with the Gold Standard Foundation, another globally accepted certification standard for carbon mitigation projects. When it comes to Chennai city, it is notable that an appreciable number of current and future projects stand to be eligible for the programme, which welcomes initiatives such as bio-methanation plants, tree-planting, bio-fertiliser projects, electric vehicles and energy-efficient lighting. In a quote to the New Indian Express, a corporation official stated, “The city corporation has been undertaking several green initiatives and has several eligible projects like Miyawaki urban forests that help reduce carbon emission. We will be able to use the revenue generated from this for other city infrastructure projects.”
News reports say that a Request for Proposal has been announced, inviting consultants to help the Corporation set up the complete framework for the trade of carbon credits, from foundation till the identification of potential buyers. Further, it is planned to hire a third-party who will validate the calculation of emission reductions, preserving the integrity of the carbon credits that the civic body can claim ownership of. In a quote that augurs well for the future, a corporation official stated to the New Indian Express, “In the future, if other government agencies would like to set up a similar framework, we will be open to helping them too.” Even though the concept of carbon trading has come under criticism from some quarters that claim that it is not enough to address the urgent problem of climate change, it is unarguably a step forward for the environment. It will be interesting to see how Chennai leverages the opportunity.
