Economic Survey 2024 raises questions on India’s voluntary carbon market; double accounting & expensive emission reduction activities are concerns

The 2023-2024 Economic Survey Report raises the same concerns highlighted in “Discredited”, the Centre for Science and Environment, and the Down To Earth investigation on the voluntary carbon market (VCM) released in October 2023.

VCM operating in India could make the country’s emission reduction expensive and difficult, given its net-zero commitment, the survey pointed out. India is the world’s second-largest source of carbon offsets in the voluntary carbon market.

The VCM allows private actors to voluntarily buy and sell carbon credits generated from emission reduction or removal projects.

The Survey pointed out that there is uncertainty about whether a credit sold to a foreign entity will also be claimed by the country where the credit was generated, in this case, India, for their emission reduction target. This scenario could lead to double accounting.

The Discredited report asked this question of what would happen to the 675 Indian renewable energy projects registered with the VCM, accounting for 268 million carbon credits. Of this, 148 million have been claimed.

“So, how can these be accounted for in the Indian Nationally Determined Contributions (NDC)? Or can they? Will this not lead to double accounting?” the report read.

As part of the NDC, India plans to augment non-fossil energy so that it can meet 50 per cent of its electric power requirements by 2030 and to increase the ‘sink’—grow forests to sequester carbon.

The Economic Survey pointed out another uncertainty raised in Discredited: If India cannot claim these credits, the country’s emission reduction activities as part of its climate commitments could become expensive.

“The current voluntary carbon market is based on cheap options and this means that countries have ‘sold’ off the lowest-hanging fruit—the options of emission reductions that they could afford,” Discredited read.

These reductions, it added, would be on the balance sheet of foreign entities and governments. Countries will not be able to afford to make investments in the hard-to-abate options, and these will contribute to emissions.

There are other issues with VCM. Discredited found that VCM‘s role in the reduction of global greenhouse gas emissions is questionable and communities rarely financially benefit from carrying out carbon-sequestering communities.