UPSC 2014 Mains GS3 Model Answer - Should the pursuit of carbon credits and clean development mechanisms set up under UNFCCC be maintained even though there has been a massive slide in the value of a carbon credit?

Model Answer:

Carbon credits and Clean Development Mechanisms (CDM) under the United Nations Framework Convention on Climate Change (UNFCCC) were created to encourage emissions reduction globally. Despite a decline in carbon credit value, maintaining these mechanisms remains crucial, especially for a rapidly developing country like India, balancing economic growth with environmental commitments.

Arguments for Maintaining Carbon Credits and CDM

• Supports Sustainable Development Goals (SDGs): CDM projects promote renewable energy, improve energy efficiency, and reduce emissions, aligning with India’s SDG targets and long-term climate goals.
• Attracts Foreign Investment: CDM encourages investment in green projects, as foreign players support low-carbon development, bringing both technology and funding into India’s energy sector.
• Boosts Renewable Energy Sector: Carbon credits incentivize renewable projects like solar, wind, and biomass, aiding India’s target to achieve 500 GW of non-fossil fuel energy by 2030.
• Climate Resilience and Environmental Benefits: Continued CDM efforts reduce dependence on coal, mitigate air pollution, and improve public health, critical in India’s urbanising regions.

Challenges

• Low Carbon Credit Value: The sharp decline in carbon credit prices reduces revenue for emission reduction projects, making them financially less attractive.
• Complex Procedures and Uncertainty: High transaction costs, bureaucratic challenges, and uncertain market demand make CDM projects challenging to implement effectively.
• Energy Security Concerns: India’s reliance on affordable coal for energy security poses a challenge, as renewable energy alone may not yet meet the country’s growing power needs.

‍Despite the fall in carbon credit value, India should continue pursuing CDM and carbon credits. They offer a pathway to green growth, align with international climate commitments, and help transition towards a sustainable energy system. Leveraging these mechanisms with policy support can help balance economic growth with environmental stewardship, crucial for India’s sustainable future.

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