Representative image of forest.
Credit: DH Photo
Many of India’s leading tech companies have committed to becoming carbon neutral by 2050. A few have already cut their emissions through reduction measures or offset them by buying carbon credits from the carbon market. A carbon credit is a unit that represents one tonne of carbon dioxide equivalent that has been removed from the atmosphere through sequestration or prevented from being emitted into the atmosphere. Carbon credits from afforestation and preventing deforestation are one of the globally top generators of carbon credits, particularly from countries in Africa, Asia, and Latin America.
There are two key concerns that corporate companies should be aware of before buying carbon credits from afforestation projects. One is: Do the carbon credits generated provide financial benefits to farmers and forest-dependent communities that are involved in afforestation or do they generate income from planted trees such as through the sale of timber or forest produce like flowers, leaves etc?
Recent analyses of carbon credits from afforestation projects — for instance, a case study by Guardian in Latin America and Down to Earth in India — show that rarely do communities get financial benefits through carbon credit projects and much of the share goes to private entities including project developers, verifiers, auditors, and registries. Further, in the pursuit of afforestation for carbon credits, local communities are ill-advised to raise tree plantations like eucalyptus or casuarina as block plantations to register more carbon credits without realising that these trees have little timber or other non-timber value. The market values are often saturated due to large-scale plantations and over-supply of these trees.
It is for these reasons that carbon credit projects in the afforestation sector in India such as the Clean Development Mechanism failed. This mechanism under the Kyoto Protocol of the United Nations Framework Convention on Climate Change allowed Annex I countries, mainly developed nations, to buy carbon credits from non-annex countries. In the forest sector, block tree plantations of species like eucalyptus and casuarina in Haryana and Tamil Nadu both failed as carbon credit prices fell at the end of the Kyoto Protocol’s first commitment period in 2012. Many of these tree plantation schemes raised for carbon credit were later abandoned.
India’s voluntary carbon market witnessed a marked rise in recent years, particularly due to global companies aiming to achieve net zero emissions. This offers an opportunity to increase tree cover and benefit local communities if only the corporate companies can support such schemes with a clear valuation of the social benefits alongside the carbon credits.
Instead of buying carbon credits from private entities, often generated at a social cost to communities, the companies can support tree planting in the neighbourhood and in the restoration of degraded forests with the help of state forest departments and NGOs working with local communities who know the type of tree species to be planted that are beneficial to local communities, like Terminalia, Sal, Mahua and Tendu.
There is also potential to plant trees in urban and peri-urban areas to improve green cover and help in greener cities. Hedgerows—which are linear plantations along roads—and boundaries of agricultural land can also be considered as they have a high potential to gain carbon credits while mitigating urban heat effects and improving biodiversity.
A report published by the IUCN notes that less than 2% of funding comes from the private sector for forest restoration, and given India’s restoration potential, corporates can positively contribute to forest restoration and help India achieve its restoration commitments like the Bonn Challenge, where India has committed to restoring about 26 million ha of degraded land by 2030.
An important challenge to be addressed is measuring carbon sequestration in tree plantation and forest restoration made through Corporate Social Responsibility (CSR) and giving certified carbon emission reduction to companies. In June 2023, the Government of India announced the ‘Carbon Credit Trading Scheme, 2023’ under the Energy Conservation Act for setting up a carbon credit trading market in the country. The scheme will also give accreditation to the agency for carbon verification based on international standards to measure carbon sequestration through tree plantations and certify carbon credits, which the companies can use to meet their emission reduction targets.
Although it’s a scheme in the making, it is necessary for such schemes to ensure that the proceeds from carbon credits go mainly to local communities and not to auditors and verifiers as is currently happening. Lastly, companies contributing to tree plantations through CSR should be aware of the carbon credits they are buying and if it has contributed to the social benefits of local communities.
(The writer is a researcher examining the social and ecological impacts of tree planting)