Carbon markets have emerged as a game changing factor as nations ramp up their efforts to fight climate change. Carbon markets encourage reductions in greenhouse gas (GHG) emissions by allowing organizations and individuals to buy and sell carbon credits. Each carbon credit represents a reduction of one tonne of carbon dioxide equivalent (CO2e).As of 2023, the global carbon market was valued at approximately $949 billion including diverse technologies like renewable energy, energy efficiency, afforestation and reforestation, carbon Capture and storage and many more. Among the 170 types of carbon credits generated, biogas is one of the significant contributors. 
In India, carbon markets have gained significant traction, driven by the nation’s commitment to its Nationally Determined Contributions (NDCs) under the Paris Agreement. In 2022 the market was valued at $1.2 billion. The Indian government has been proactive in establishing frameworks to support carbon trading, aiming to create a robust mechanism that not only helps meet environmental goals but also stimulates economic growth. From 2010 to 2022, India issued 35.94 million carbon credits and actively traded them on international markets.
As per its NDCs, India is currently focusing on creating a domestic market for carbon credits in order to fulfill its net zero goals. . By balancing national and international priorities, India aims to contribute to global climate targets and advance sustainable development on a domestic level at the same time. Leveraging this market has the potential to spark a biogas revolution in India, offering significant benefits for rural communities, the environment, and the economy.
Biogas as a solution
India is currently confronting major energy and environmental concerns due to its rapidly growingpopulation and economy. In rural regions, the use of traditional biomass fuels like firewood and cow dung cakes is still very prevalent, leading to indoor air pollution, deforestation, and health problems. The nation also struggles with unchecked animal and farmland waste, which when left to decompose, releases methane, a potent greenhouse gas.
Modern biogas technology presents a viable renewable energy (RE) solution to these challenges andIndia’s Nationally Determined Contributions (NDCs) under the Paris Agreement.Under the Paris Agreement, India aims to reduce carbon intensity by 45% below 2005 levels by 2030 and boost renewable energy capacity to 500 GW by the same year. Reaching these ambitious goals requires concerted efforts from many sectors, with significant backing from corporations.
By converting animal and farmland waste into clean energy, biogas reduces GHG emissions while also addressing three of the most pressing challenges faced in developing countries like India:
1. Meeting Energy Needs: Biogas provides a reliable source of energy for cooking, supporting the energy needs of vast populations.
2. Extending Clean Energy Access: It reaches remote and climate-vulnerable regions where access to reliable clean cooking options is limited, thus bridging the last mile of energy accessibility.
3. Promoting Sustainable Growth: Biogas meets increasing energy demands while adhering to climate-responsible practices, aligning with India’s commitment to reduce carbon intensity and expand renewable energy capacity.
Corporate involvement and financial incentives
The increasing popularity of household biogas plants in India can be attributed to corporate sustainability programs and the possibility of earning carbon credits. In an effort to meet their carbon reduction commitments and sustainability targets, corporations are increasingly investing in biogas projects. This has given a significant boost to India’s biogas market size which was valued at 1.47 billion USD in 2022 but is expected to grow to2.25 billion USDin 2029 at a compound annual growth rate (CAGR) of 6.3% during the 2022-2029 period.
Biogas projects supported by corporations contribute to community empowerment by improving energy security, particularly in remote and underserved rural regions. By replacing traditional fuels with clean energy, these initiatives mitigate health risks associated with indoor air pollution and promote sustainable agricultural practices through biofertilizer use.
Generating carbon credits from Biogas plants
Biogas plants generate carbon credits through effective waste management and fuel replacement. Waste management involves capturing methane emissions from livestock waste that would otherwise be released into the atmosphere while fuel replacement refers to the displacement of traditional biomass or fossil fuels (such as LPG) with biogas for cooking and heating.
A standard household biogas plant of 2 cubic meters/day biogas generation capacity can potentially generate between 6 to 10carbon credits every year.. With over 536.76 million million cattle, India’s potential for scaling biogas is immense. Current market rates for carbon credits can range from$5 to $15 per credit depending on the certification and demand. Biogas plants can therefore generate significant revenue streams, which can subsidize the technology providing a strong financial incentive to drive further adoption of Modern Biogas technology among rural households.
Traceability and reliability of carbon credits
One of the most crucial components of carbon markets is the traceability and reliability of carbon credits. Modern biogas technology offers robust monitoring and verification protocols, ensuring that the emission reductions are real, additional, measurable, and verifiable. Unlike other climate solutions, such as improved cookstoves, which can have variable performance and usage patterns, biogas plants provide consistent and quantifiable emission reductions. Moreover, biogas plants contribute to several co-benefits, including improved sanitation, reduced indoor air pollution, and enhanced soil fertility from the use of biofertilizer.
The broader impact on India
The widespread adoption of modern biogas technology can have far reaching effects ona country like India, which is heavily dependent on crude oil imports for LPG. To ensure that its citizens have access to clean cooking fuel at affordable rates, the government provides LPG subsidies worth 9,000 to 12,000 Crores every year. India may improve energy security, lower its import bill, and lessen the environmental effects of using fossil fuels by substituting locally produced biogas for LPG.
Biogas plants can also substantially improve the standard of living of farmers and rural communities. This aligns with the government’s vision of a self-reliant India (Atmanirbhar Bharat) and rural development.
The Indian Carbon Market
India’s proactive approach towards improving the infrastructure of the carbon market is indicative of its commitment to combating climate change and promoting sustainable development. To encourage the development of clean technologies, such as biogas, and to create an environment that is favorable for carbon trading, the government has launched a number of programs and reforms. Major initiatives include incorporating carbon pricing into national regulations, streamlining project registration, and offering financial incentives for renewable energy and biogas projects. The goal of these initiatives is to accelerate India’s shift to a low-carbon economy while reducing the country’s reliance on fossil fuels.
In 2024, India made significant changes to its carbon credit trading scheme, aimed at encouraging voluntary participation. The updated method aims to increase participation by providing more precise criteria and an easy-to-use trading platform, especially for small-scale biogas projects. With the introduction of an offset mechanism in this strategy update, businesses can now register projects and obtain tradable carbon credit certificates (CCCs).
The Indian Carbon Market (ICM), which integrates the Clean Development Mechanism (CDM) and other domestic schemes, is expected to be one of the largest in the world by 2030. This integration aims to streamline the process of generating, trading, and verifying carbon credits, making it easier for projects like biogas to participate and benefit. The ICM’s development is crucial for providing a robust platform for biogas projects to thrive. By ensuring transparency, accountability, and high standards, the ICM can enhance the credibility and attractiveness of Indian carbon credits on the global stage.
Modern Biogas technology has hugepotential for altering the energy landscape of India. India can realize this potential and help farmers, the economy, and the environment by embracing carbon markets. Incorporating biogas into business sustainability initiatives and national climate change policies not only expedites India’s transition to net-zero emissions but also establishes a model for other countries confronting comparable energy and environmental predicaments.
- Published On Jul 29, 2024 at 12:03 PM IST
Join the community of 2M+ industry professionals
Subscribe to our newsletter to get latest insights & analysis.
Download ETEnergyworld App
- Get Realtime updates
- Save your favourite articles
Scan to download App
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their original owners.
Comments are closed.