India, despite its lower per capita emissions compared to developed nations, has set ambitious targets to combat climate change and align with Environmental, Social and Governance (ESG) standards. These targets encompass achieving net zero emissions by 2030, reaching a non-fossil energy capacity of 500 GW, and reducing 1 billion tonnes of carbon emissions by 2030. While these goals are commendable, the key lies in crafting an actionable implementation strategy to realise these ambitious objectives.

India’s demographic landscape features a population of 1.4 billion individuals distributed across 28 diverse States, with some States like Uttar Pradesh and Bihar having populations comparable to Western countries. Recognising that tackling climate change requires a collaborative approach, India’s federal structure empowers States to formulate policies aligned with national ESG objectives. This decentralised approach promotes innovation, collaboration, and localised solutions, epitomising cooperative federalism in the realm of climate action.

Given the constitutional division of powers, States have significant control over areas contributing to large-scale emissions. Electricity generation, which accounts for around 42 per cent of emissions, along with sectors like industry, transport, health and forests, offers States opportunities to collaborate with the Central Government in carbon emission reduction strategies.

Emerging concept

The emerging concept of a carbon credit market presents a mechanism for States to offset their emissions by investing in emission-reducing projects. India’s 2023 Carbon Trading Programme is a groundbreaking initiative aimed at accelerating the nation’s climate change mitigation efforts. This market-based approach encourages industries and States to lower their greenhouse gas emissions. Entities that successfully reduce their carbon footprint can earn and trade carbon credits in this market.

This programme holds particular promise for individual States, enabling them to monetise emission reduction efforts. States that undertake effective climate mitigation projects, such as promoting renewable energy adoption, afforestation and energy efficiency, can earn carbon credits based on emissions reductions. These credits can be sold in the carbon market, generating revenue and fostering environmentally friendly practices. Consequently, States are incentivised to adopt greener technologies, enhance infrastructure, and engage in healthy competition to outperform one another in emission reduction.

Furthermore, economically prosperous States, due to their higher carbon contributions, can lead in investing in costly low-carbon technologies, subsequently sharing these technologies to achieve economies of scale.

Even smaller States like Assam, ranked as the fifth most vulnerable to climate change, have embarked on significant green initiatives. Assam aimes at increasing forest cover to 38 per cent from the current 36 per cent within five years. Towards this, the government plans to plant one crore trees this year and complete the drive by October 2.

Additionally, Assam is investing in alternative energy sources, promoting ethanol industries, and incentivising government employees to purchase electric vehicles through a new EV policy. Overall, the efforts of individual States play a pivotal role in contributing to India’s carbon credit and ESG goals.

When one State successfully implements innovative policies that lead to better ESG performance and improved carbon credit, it serves as an inspiration for others to follow suit. This spirit of competition creates a positive domino effect, accelerating progress in climate mitigation across the nation.

Deb is the Chief Economist, Chief Minister’s Secretariat, Government of Assam, and Barooah is a student of Political Science at Ashoka University