By Brajendra Singh Tomar
While carbon credit monetisation is emerging as an invaluable asset in helping combat the proliferation of GHG emissions, India lags a little behind due to the fragmented and unorganised nature of the current carbon credit market. Having said that, India is all set to embrace a seismic transformation, with active efforts being made by the government to boost green finance by launching a fintech lab for carbon credit trading in the Gift City, Ahmedabad.
Now coming down to the most pressing concern, plaguing the nation’s current carbon credit monetisation network is none other than the asymmetry of opportunities, as per which the benefits of carbon credit monetisation are largely harnessed by OEMs. On the contrary, these benefits need to be leveraged by end users or buyers of the vehicles, since they are the ones actually responsible for replacing ICE vehicles’ consumption and in turn producing carbon credits.
In tandem with the present market setup, wherein the end-user or the buyer, especially the three-wheeler and two-wheeler EV buyers, who borrow loans at exorbitant rates due to financial limitations, are the legitimate individuals leading the charge of EV penetration within the market. Despite their efforts, in mitigating carbon emissions by at least 2-5 tonnes in a year, time and again they have been refrained from harnessing the potential that is truly theirs.
With the recent revival of the green movement, green financing institutions have actively tapped into the market, carrying the potential to bridge the gap between asymmetry of opportunities. Embodying the role as the connector of the entire carbon credit ecosystem, such platforms are rooted in the very essence of building a proposition that passes on the benefits of carbon credits to the beneficiary, who is typically underprivileged. With technology acting as the lead building block of this cohesive network, there is no denying that India will be the powerhouse of an inclusive carbon credit ecosystem.
Leveraging tech
While it’s clear that existing models have been designed for monetisation by large corporations recently, efforts are being made to build a model that is capable of delivering such solutions at scale without friction and the ability to connect to private or public institutions for carbon credit trade. Since technology has always been the cornerstone of the EV industry, by leveraging the power of IoT devices, certain green financing institutions intend to foster a three-way beneficiary model.
Acting as an aggregator of the carbon credit movement, green financing fintech platforms monitor these IoT devices, ensuring that the data in a legitimate way is presented on their platform, which can be further connected to public or private carbon credit buyers and sellers, who can buy these carbon credits from the retail user, namely the underprivileged segment in an individual or aggravate way. From thereon, the benefits of these carbon credits will be directly transferred to the end user, in the form of subsidies, interest subvention, or even direct money transfers.
Looking beyond just EVs
Fuelled by government support and allocation within the FY2024 budget, there has been a recent surge in the adoption of rooftop solar panels, especially amongst the underserved segment and remote areas. With rooftop solar panels emerging as an individual asset, it becomes imperative to monitor the utilisation of such assets which may be either livelihood generators or leveraged for personal/family consumption.
Aligning with the Government of India’s Net Neutrality agenda, green movement advocators, are also taking up the responsibility to incentivise solar panels as a source to generate carbon credits, which can again be monetised by individuals and families who borrow to install solar panels for personal consumption, and use it to serve their daily needs whether it’s cooking, or generating electricity and or even charging EV batteries.
Conclusion
In the absence of a well-established carbon credit exchange network, the introduction of inclusive carbon credit monetisation is more than monumental. In the retail consumption realm, it will capitalise on empowering the retail user, creating awareness amongst the underserved about their legitimate rights to avail carbon credit benefits. This opens true value for the legitimate beneficiary, encouraging more and more users to embrace the EV revolution.
The author is the Co-founder & CEO, Finayo
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