Mentor’s Comment

In an era when climate markets are rapidly gaining traction, India’s push to create its own carbon credit trading system represents a major step towards balancing growth and sustainability. However, as global experiences reveal, the promise of carbon markets often hides complex questions of equity, consent, and justice. This article examines how India can build a just, transparent, and credible carbon market, drawing lessons from global failures and aligning with its developmental and environmental priorities.

Why in the News

India is rolling out its Carbon Credit Trading Scheme (CCTS), a landmark move that will create a domestic carbon market for emission trading and offset generation. The scheme comes amid a global boom in carbon credits, with 175–180 million credits retired annually. Yet, recent controversies such as the Northern Kenya Rangelands Carbon Project suspension by Verra (2023, 2025) have exposed how poorly governed carbon projects can violate community rights and reproduce colonial-style exploitation. This makes it crucial for India to institutionalize safeguards to prevent land alienation, ensure free, prior and informed consent (FPIC), and guarantee fair benefit-sharing, especially for farmers and marginalized communities who stand at the frontline of climate action.

Introduction

The industrial era’s growth model has pushed the Earth beyond its planetary boundaries, creating a need to decouple economic expansion from environmental degradation. For developing nations like India, degrowth is neither feasible nor just. The path forward lies in green growth, powered by cleaner energy, sustainable agriculture, and carbon crediting mechanisms that reward climate-positive behavior.

However, as India builds its carbon market, it must ensure that climate justice is not sacrificed at the altar of climate finance.

Growth and Sustainability, A Delicate Balance

1. Decoupling growth from pollution: The industrial revolution model is no longer viable; India must grow while reducing emissions through renewable energy, micro-irrigation, and sustainable farming.
2. Equitable development: Developing countries cannot afford “degrowth”; instead, they must innovate for green growth pathways that align prosperity with environmental protection.
3. Indian examples: Rapid progress in solar energy and micro-irrigation exemplifies how growth and sustainability can reinforce each other.

What Are Carbon Credits and Why Do They Matter?

1. Definition: A carbon credit represents a certified reduction or removal of greenhouse gases (GHGs), measured in CO₂-equivalents.
2. Generation sources: Created through mitigation activities like renewable energy or sequestration measures such as reforestation, agroforestry, and biochar.
3. Global scenario: Annually, about 175–180 million credits are retired, with most originating from renewable energy and nature-based projects like REDD+.
4. India’s initiative: The CCTS sets emission-intensity benchmarks for industries and includes voluntary offsetting mechanisms, managed through a national registry and trading platform.
5. Emerging sectors: Draft methods for biomass, compressed biogas, and low-emission rice cultivation have already been released.

The Promise and Peril of Carbon Projects

1. Untapped agricultural potential: Despite 64 Indian projects listed under Verra, only four are registered, none have issued credits yet, largely due to weak farmer engagement and training gaps.
2. Risk of exploitation: Without safeguards, carbon projects can mirror colonial plantation logic, especially as carbon prices rise.
3. Global warning signs: The Northern Kenya Rangelands Carbon Project (2012) faced suspension for bypassing consent and misrepresenting community participation.

Violations documented:

1. Lack of FPIC from indigenous communities.
2. Projects implemented on unregistered community land.
3. Enforced by armed rangers; governance opaque.
4. 2025 Kenyan court judgment confirmed absence of public participation.
5. Parallel cases: The Lake Turkana Wind Project fenced 150,000 acres of community land — cutting herders off from water and grazing.

India’s Vulnerability: A Warning from Kenya

1. Community impact: Carbon projects on village commons, forest fringes, or grazing lands can disrupt traditional livelihoods without proper consent.
2. Caste and equity issues: Agricultural carbon projects have shown tendencies to exclude marginalized caste farmers, offering minimal benefits.
3. Regulatory gap: India’s CCTS prioritizes procedural compliance but neglects land rights, FPIC, and benefit-sharing — leaving space for exploitation.
4. Potential consequence: Without reforms, India risks replicating extractive climate models that alienate vulnerable communities.

Towards a Fair and Transparent Carbon Market

1. Balanced regulation: Overregulation deters genuine actors, while underregulation invites exploitation. India needs a “light but firm” regulatory model.

Core safeguards needed:

1. Transparency: Mandatory disclosure of benefit-sharing agreements.
2. Community consent: Institutionalize FPIC before project initiation.
3. Adaptive regulation: Policies that evolve through stakeholder consultations.
4. Trust building: Incorporate third-party audits and grievance redressal.
5. Justice as the foundation: Climate action must empower, not exploit, those sustaining the land.

Conclusion

India’s journey toward a low-carbon future cannot rely solely on markets, it must rest on ethics, equity, and empowerment. As the Carbon Credit Trading Scheme (CCTS) takes shape, the focus must move beyond procedural compliance to protecting land rights, ensuring free, prior, and informed consent (FPIC), and guaranteeing fair benefit-sharing with those who nurture the environment. Learning from global pitfalls, India has the opportunity to design a carbon market that is transparent, just, and inclusive, turning climate finance into a true instrument of climate justice and sustainable development. Only then can India demonstrate that growth and green governance are not competing goals, but two sides of the same equitable future.

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