UNDP's National Carbon Registry revolutionising climate action in India

This article is authored by Pradyut Bordoloi, Member of Parliament, Lok Sabha and Kaviraj Singh, founder and managing director, Earthood.

In a world contending with the escalating threats of the climate crisis, the urgency to confront the challenges posed by carbon emissions and greenhouse gases has never been more pronounced. Market-based strategies for carbon mitigation have witnessed rapid expansion since the 2015 Paris Agreement, encompassing 73 national and sub-national jurisdictions responsible for 11.66 billion tonnes of CO2e emissions, equivalent to approximately 23% of global greenhouse gas emissions. Taking a substantial stride in addressing this global crisis, the United Nations Development Programme (UNDP) has introduced the National Carbon Registry, an open-source software solution with the potential to revolutionise carbon markets. This groundbreaking software aims to assist countries in efficiently managing and trading carbon credits. As such, it becomes imperative to delve into the significance of the National Carbon Registry, examine the challenges it faces, and explore the prospects it holds for India as it endeavours to meet its climate action goals.

People protest against the climate crisis. (Reuters)

The National Carbon Registry is a digital public good (DPG) developed by UNDP that is poised to reshape the way countries manage and trade carbon credits. It is built on open-source code, allowing nations to adapt and replicate the system to suit their unique requirements and circumstances. This adaptability is crucial as it can significantly reduce production costs and implementation timelines, enabling a broader range of countries to participate in carbon markets.

One of the key strengths of the National Carbon Registry is its adherence to national and international best practices. It has been developed in collaboration with various organisations, including UNDP, the World Bank, the United Nations Framework Convention on Climate Change (UNFCCC), and the European Bank for Reconstruction and Development (EBRD). This collaborative effort ensures that the software incorporates the latest insights and expertise, making it a reliable tool for managing carbon credits.

Moreover, the registry is designed to be interoperable, enabling integration with national measurement, reporting, and verification (MRV) systems. This interoperability extends to international digital platforms such as UNDP's voluntary cooperation platform and the global Climate Action Data Trust (CAD Trust) launched by the World Bank. This interconnectedness is crucial for building a comprehensive digital public infrastructure to address climate challenges effectively.

As one of the world's largest and rapidly growing economies, India holds a crucial role in the global fight against climate change. The National Carbon Registry brings significant potential benefits for India. It serves as a robust tool for streamlining the management of carbon credits, offering efficiency in tracking, verification, and trading. This technology can aid India in meeting its Nationally Determined Contributions (NDCs) and reinforcing its climate action efforts.

Moreover, India can realise cost-efficiency by customising the National Carbon Registry to its specific needs through the use of open-source technology. This adaptability can potentially reduce the expenses associated with developing and maintaining carbon credit registries, a particularly important aspect for nations with limited resources.

Furthermore, the registry promotes global collaboration by facilitating the exchange of knowledge and best practices. India stands to gain valuable insights from the experiences of other countries while contributing its own wisdom to the international community. This collaborative approach fosters a stronger, united effort in addressing the climate crisis.

The inauguration of the Emission Trading Scheme (ETS) in Surat was marked by enthusiasm, with claims of a 24% reduction in pollution and an anticipated 36% savings for the plant since its initiation. Nevertheless, it's crucial to note that the data supporting these assertions hasn't been updated beyond 2020. Additionally, the monitoring has primarily focused on suspended particulate matter (SPM) rather than the more commonly observed PM10 and PM2.5, raising questions about the comprehensiveness of the reported environmental impact.

Therefore, while the National Carbon Registry holds immense promise, India encounters various hurdles in the development of its carbon and green credit markets.

One of the foremost challenges lies in stimulating demand for carbon credits. To achieve this, market participants, including businesses and industries, must grasp the value of carbon credits as a means to offset emissions and promote sustainability. Effective communication and awareness campaigns are essential to foster this demand.

Accurately establishing the baseline for carbon emissions and credits represents another critical challenge. Crafting credible baselines is a complex task that demands robust data collection and verification processes. India must make investments in monitoring and reporting systems to ensure precise baseline setting.

Decisions surrounding the creation of a secondary market for carbon and green credits are equally pivotal. While allowing speculators to participate can deepen the carbon market, it may also result in unintended consequences. Striking a balance between the interests of credit generators and speculators is a challenge that requires careful consideration.

Additionally, deliberation is needed on the inclusion of carbon credits in financial derivatives like futures and options. Derivatives can introduce complexity and volatility to the market, necessitating a thorough assessment of their potential impact on carbon prices and credit generation.

The problem of greenwashing, or the misrepresentation of environmental efforts, represents a significant challenge in the transition to greener energy and reduced emissions. India must establish stringent standards and transparency in reporting to effectively combat greenwashing.

Addressing these challenges necessitates a coordinated effort from the Indian government, businesses, and civil society. It is crucial to view these challenges as opportunities for growth and innovation rather than insurmountable obstacles.

In summary, the 'CHARGE' strategy—Coordinated efforts by government, businesses, and civil society; Harnessing the value of carbon credits through effective communication; Accurate baseline setting with investments in data and monitoring; Reasoned decisions on secondary markets and derivatives; Greenwashing combated through stringent standards and transparency; and viewing challenges as Excellent opportunities for growth and innovation—provides India with a holistic approach to navigating the complexities of carbon and green credit markets.

This article is authored by Pradyut Bordoloi, Member of Parliament, Lok Sabha and Kaviraj Singh, founder and managing director, Earthood.