Amidst the climate crisis the world is facing, many governments are deciding to mitigate carbon emissions by banning fossil fuel cars and switching to greener alternatives.
However, the environment-friendly solutions are perceived infeasible for its heavy initial costs. This holds true, especially when it comes to spending taxpayers money for the greater good.
But, an IAS officer in Indore, Madhya Pradesh, has found a solution to monetise green projects by selling carbon credits earned for the projects and earning a revenue worth Rs 50 lakh from it.
A carbon credit is a tradable certificate or permissions obtained for the right to emit one tonne of carbon dioxide or other harmful greenhouse gases.
Chief Executive Officer of Smart City Project, Aditi Garg, says, “It is the first time when any smart city in the country has been able to earn revenue from its sustainable projects in such a manner.”
Converting carbon to money
“The environment-friendly projects are viewed as economically infeasible as they require huge investments. They are taken more out of the social or environmentally conscious mindset. The environment and climate is not a profitable commodity. So, I wanted to challenge the notion by earning small but a considerable amount of money,” says Aditi.
“Indore has been the cleanest city in India for four consecutive years. Hence, 10 months ago the Indore Smart City Development Limited (ISCDL) registered three projects — a bio-methanation plant, a compost plant and 1.5 MW solar plant, under the Verified Carbon Standard (VCS) programme of the United Nations Framework Convention on Climate Change (UNFCCC),” the smart city CEO says.
The registered projects helped reduce carbon dioxide emissions by over 1.7 lakh tonnes. “One tonne of carbon dioxide equals one carbon credit. The gross earnings received from these projects was paid at the rate of $0.05 per tonne,” she says.
Explaining the process, Aditi says that the next step, after registering the projects with the agency, is to get the documentation in place for submissions.
“The agency verifies the credibility and potential of the project, after which the certificates with carbon credits are issued. The certificates can then be traded in the international money market,” Aditi tells The Better India.
Venturing into uncharted waters
The IAS officer describes the project of trading carbon credits as a crucial challenge with a great learning experience. “As we were the pioneers of this project in India, there was no template for us to follow. Initially, it was difficult to convince the buyers about the credibility, as Indore is not a metro city known to global buyers,” Aditi says.
Adding further, she says the ISCDL was venturing into uncharted waters, directly dealing with international bodies. “We looked for experts and learned the process of bidding the carbon credits. After some research, we decided to bid higher and break down the huge chunk of carbon credits into smaller segments to find different buyers for them,” she adds.
The officer says after comparing with other sellers, the officials realised they were receiving the highest possible price. “We earned returns of 1.5% of the total cost against the expectations of less than 1%,” Aditi says.
Monetising other environmental projects
Success is an example of how the cost of environment projects can be economised.
“The revenue earned would be reinvested in other smarter, greener, sustainable and energy-efficient projects,” Aditi says adding, “We have proposed a project for a solar power plant where the money earned from carbon credits can be invested.”
Taking cognisance of the achievement, the Ministry of Urban Development, Aditi adds, has sought a presentation and shared the case study with other smart cities to replicate it.
Aditi shares that the next step would also be to “package environmental projects by individuals and private entities and monetise them”. “Private companies and individuals have solar power plants, or compositing units or other green solutions. We will club them into bigger projects and help them benefit monetarily in the same manner,” Aditi says.
Priya Kanchan, an urban planner, says that offsetting the carbon emissions is very rewarding and the perception of it being economically impractical is wrong. “The amount of land that is freed and benefits from the offset to the environment are enormous. This example should motivate other government agencies to realise that revenue can be generated from green projects as well,” she adds.
Want to know more about carbon credits? Watch explainer here.
(Edited by Yoshita Rao)