India's Kerala state to support plantations for carbon credit generation

India's Kerala state is looking to support rubber and other cash crop plantations that generate carbon credits, potentially increasing the size of the natural carbon capture credit market, state officials said.

India issued 278 million credits in the voluntary carbon market between 2010 and 2022, accounting for 17% of global supply, according to S&P Global Commodity Insights analytics. Most of the credits are registered by the standards bodies Verra and Gold Standard.

"We are publishing an expression of interest for conducting a study... after which we will be able to clearly plan the plantations' needs," said Nishand S, deputy director, directorate of plantations, Kerala.

"At present, one or two plantations are only working on carbon credits. ... We need to get more involved."

The directorate hasa modest fund of Indian Rupee 20 million ($240,000) for next year for plantations, but based on feedback, it may seek more funds, some of which may be channeled into generating carbon credits.

Platts CNC, reflecting the most competitive nature-based carbon credits that avoid or remove GHG emissions, was assessed at $2.24/mtCO2e March 24. Platts is part of S&P Global Commodity Insights.

Reforestation, afforestation

Consultancy Creduce Technologies said it was working on rubber plantations across 5,000 hectares in Kerala's Mooply, Kundai, Mundakayam, Kumbazha and Nagamallay regions to develop projects under methodologies set up by Verra.

"Some of them are reforestation projects, and some of them are afforestation projects," said Shailendra Singh Rao, founder of Creduce Technologies. "We are developing the pilots to showcase a proof of concept for these small planters in the state."

The pilot projects are expected to be registered with Verra in the next three to four months and benefit 149 stakeholders, including farmers and growers.

Per hectare, Rao estimated, 15 carbon credits could be generated, with an expectation of a $12/credit value.

Kerala's rubber plantations alone occupy some 550,000 hectares, according to an estimate by one plantation industry source.

The coastal state is also a prominent producer of tea, coffee and spices, plantations for which could also produce credits.

Creduce is working with the state governments of Mizoram, Arunachal Pradesh, Meghalaya and Tripura for jurisdictional Redd+ projects (sub-national state-owned initiatives), Rao added.

Growing awareness

Natural Carbon Capture credits generated by Indian projects had not yet reached their full potential, despite India being a large agricultural economy, according to S&P Global analyst Abhijeet Thakkar.

"For this segment to grow, there would have to be more knowledge and awareness, and it would also need the government's push and funding," Thakkar said.

However, the fact that India was looking to increase forest and tree cover was positive for the generation of carbon credits in this segment, he added.

India's Nationally Determined Contributions, a part of the Paris Agreement, target creation of a 2 billion-3 billion mtCO2e sink through additional forest and tree cover by 2030, as stated by the Indian government to the United Nations Framework Convention on Climate Change.

Under Gold Standard's registry, the Bagepalli CDM Reforestation Program of Karnataka issued 32,938 natural carbon capture credits in 2016 and 58,154 credits in 2021, according to Thakkar.

From 2017 to end-February 2023, some 43,370 credits from the project had been retired, he said.

Overall, Natural Carbon Capture-based credits form just 1% of Indian carbon credits, according to S&P Global Commodity Insights data.

Carbon stock

India's State of the Forest Report 2021 estimated the country's total carbon stock in forestry at 7.204 billion mtCO2, including 529.47 million mtCO2 in plantations and trees outside forests, Ashwini Kumar Choubey, Minister of State for Environment, Forest and Climate Change, said March 23 in the upper house of parliament.

"There is an increase of 79.4 million mt in carbon stock of the country as compared to the last assessment of 2019," Choubey said.

"Indian carbon market is envisaged which will, inter-alia, have an offset mechanism," he said. Carbon credits would be generated and sold by farmers and local community councils, he said.