Even as the Uttar Pradesh government is working towards increasing rural income, the state has created an additional revenue stream in the form of ‘carbon finance’ for the farmers.
The state is vigourously pushing agroforestry and encouraging farmers to plant fast-growing trees including poplar, melia, dubia, semal etc to earn carbon credits.
“The carbon credits generated from such agroforestry will be purchased every 5 years at the rate of US$ 6 per credit,” a senior state official said.
It is estimated that between 2024 and 2026, more than 25,000 farmers will receive incentives totalling Rs 202 crore from carbon finance before its ambit expands to encompass more farmers.
The project is aimed at contributing to India’s ambitious target of ‘net-zero’ emissions by 2070.
Agroforestry or tree-based farming is nature-based activity for carbon-neutral growth. The carbon credit earned from agroforestry is sold at a price determined according to the social impact of the project.
The participating farmers, thus, have a model to secure carbon credits through agroforestry and earn money by selling them.
At the same time, such plantations are also abundant sources of raw material for wood and paper industries.
Interestingly, UP is looking to plant more than 365 million saplings in the current financial year 2024-25. The state is asking farmers to participate in the plantation drive and onboard the ‘carbon finance’ spectrum.
UP chief minister Yogi Adityanath has directed officials to promote carbon finance among the farming community. TERI and VNV Advisory Services are assisting in the process.
In the first phase, farmers from six divisions of UP will benefit from carbon credits. These divisions are Gorakhpur, Lucknow, Bareilly, Meerut, Moradabad, and Saharanpur.
In the second phase, seven divisions viz. Devipatan, Ayodhya, Jhansi, Mirzapur, Kanpur, Varanasi and Aligarh have been selected.
In the third phase, the entire state is proposed to be covered under carbon financing.
Carbon finance is an innovative financial instrument that assigns a monetary value to carbon emissions. It provides businesses, looking to offset their emissions, with a tradable permit through carbon credits.
A carbon credit allows its holder to emit a tonne of carbon dioxide or an equivalent amount of other greenhouse gases. In the context of farmers, it targets the reduction in carbon emissions achieved through trees they plant.
The farmers are given carbon credits for each tonne of carbon dioxide emissions they prevent, providing them with financial benefits as an incentive.