Give credit where credit is due

What Dhumal is asking for is a step ahead of this one — involving a bit more complexity and monitoring. It is similar to the concept used by the world to deal with the problem of carbon dioxide under the Kyoto protocol — using financial mechanisms to spur clean tech. Forests are part of this mechanism as they are invaluable carbon sinks. Forests preserved, translate into carbon saved.

Trading in emissions was demonstrated by the highly successful US Environmental Protection Agency’s sulphur dioxide (SO2) emissions trading programme. To reduce acid rain, an overall cap on SO2 emissions was imposed on electric power plants. Power generators that found it expensive to cut sulphur emissions could buy allowances from those that made cuts at low cost. The SO2 programme showed that emissions were reduced faster and at much lower costs. This broad acceptance of emissions trading was followed by the Kyoto Protocol, which established several emissions trading mechanisms for reducing greenhouse gases.

Signatory countries to this treaty adopt legally binding commitments to reduce emissions to levels below those experienced in 1990. So, a company in the United Kingdom that has set targets to cut its own emissions can technically pay for the increase in the green cover if the Himachal government can prove that otherwise the trees would have been cut to make way for industry. That would be similar to the way developed countries pay for a technology that helps reduce carbon emissions in a power or a steel manufacturing plant in India.

Internationally, India has maintained a stance that it is the developed countries that need to pay. Domestically, we have been shy of examining if this concept can be applied to states for offering incentives to those on the path of green growth. In the last two years, the carbon markets have gained some maturity, silencing sceptics who thought carbon trading was too complex to work. Last year saw a spurt in the market. The carbon market grew in value to an estimated $30 billion, three times greater than the previous year.

Within India, there are no legally binding emission cuts so far, despite international pressure. The other doubt that is raised is linked to this — who will pay a state like Himachal when nobody is legally required to buy carbon credits? For this, a study of the voluntary carbon market is interesting. In the West, the demand for carbon credits is not just from those that had emission targets but also from companies which wanted to buy carbon credits voluntarily to improve their own efficiency or to sell a “green image” to the consumers. The voluntary market for reductions by corporations and individuals grew strongly to an estimated $100 million in 2006.

The next big doubt is: who will prove how much carbon is being saved, more so with forests that are complex? The same arguments were given when Net Present Value (NPV) was being introduced. Under the provisions of the Forest Conservation Act, 1980, only the commercial value of trees felled was considered, but the Supreme Court, in a landmark judgment in 2005, laid down a methodology for determining the value of ecological services provided by the forest ecosystem — timber, non-timber forest produce, firewood, fodder, grazing land, tourism, carbon sequestration, flood control, bio-diversity and nutrient cycle. Based on a formula, every company that seeks to cut forests to build a project has to pay an NPV that takes care of all this.

If some more thought is given to this concept of determining a baseline for forests — both in terms of quality and quantity — the calculation of its value may not be that difficult. The writing is on the wall: give incentives to preserve. Let the living, green trees have a monetary value and do not wait for them to be felled and chopped to place a price tag on them.

sonu.jain@expressindia.com