CHENNAI: The Tamil Nadu government is looking at carbon markets to finance its green projects and to ensure local communities benefit from it, according to Supriya Sahu, secretary of the Environment, Climate Change, and Forest Department.
Delivering her keynote address at the Conference on Carbon Neutrality organised by the Confederation of Indian Industry (CII) on Wednesday, the secretary said, “We are the only state in the country with a Green Climate Fund. Though announced earlier, it is now being rolled out with the Tamil Nadu Infrastructure Finance Management Corporation (TNIFMC) acting as the fund manager for the Government of Tamil Nadu. TNIFMC would select industries and corporates to access the allocated funds which amount to over Rs 1,000 crore. Another Rs 1,000 crore has been allocated for the greenshoe option.”
To a query on whether any such projects have been identified, Sahu said that the state is currently in the process of identification.
“This is a strategic move. They (TN government) are planning to integrate with carbon markets,” said Kavin Kumar Kandasamy, chief executive officer of ProClime, a firm that is providing recommendations to the state government on a pro bono basis in creating a robust carbon credit ecosystem. He said the state is way ahead when it comes to the energy quotient. Tamil Nadu is already into energy transition and now the state government is looking at community and climate, he added.
Sources, on condition of anonymity, said that the state has zeroed in on seven to eight projects, which could potentially be funded through green credits, but did not provide any details. Firstly the project has to be listed on a registry after which it will be rated by a rating agency and then it gets approval, they added.
Carbon markets and their credit system
Carbon markets have two kinds of players: companies that are polluters and companies which are looking to decarbonise. A carbon credit is a generic term for a tradeable certificate or permit representing the right to emit a certain amount of carbon dioxide (usually 1 metric ton) or an equivalent amount of a different greenhouse gas. It is, in a sense, the basic trading unit for carbon markets. Countries or governments set carbon allowances or caps based on their targets for reducing emissions. Entities that reduce their emissions below these set limits, can sell their surplus ‘allowance’ as carbon credits to those exceeding their emission limit.