Himachal Pradesh on Sunday signed a landmark carbon credits agreement with the World Bank for India's first clean development mechanism (CDM) project in 11 watershed divisions of the state.
Under the agreement, the bank will buy carbon credits from the new forests being developed on degraded lands under a watershed management programme.
The project, named 'reforestation project - improving livelihood and watersheds' is being implemented in 177 panchayats in 11 watershed divisions. It is aimed at reforestation in watershed areas, improving livelihoods, and generating carbon revenue for the community.
The 'emission reduction purchase agreement' for purchase of certified emission reductions (CER) was signed by Hubert Nove Josserand, deputy country director of World Bank, on behalf of International bank of Reconstruction and Development, and Sudripto Roy, additional chief secretary on behalf of the Himachal government, in the presence of chief minister P K Dhumal.
The validation process under the United Nations framework convention on climate change (UNFCCC) has been completed and likely to be registered with UNFCCC shortly.
The agreement has been signed for ten years ending December 2018, and widening of its scope could be considered depending upon growth, Dhumal later told newspersons in Shimla.
The chief minister said the project would accrue an income of around Rs2,000 per hectare per annum to the community and stakeholders, and 4000-hectare area would be covered.
One tonne of carbon dioxide converted into biomass under new plantations counts as one credit.
Josserand said the project would impact an area of 4,003.07 hectares. This surpasses the 3,500 hectare CDM project of China, making it the largest project of its kind in the world.
With this agreement, there are now 18 World Bank-supported carbon revenue programmes underway worldwide.
This places India on the global map of a future economy largely to be measured in terms of accruing carbon credits.
"Besides being the first pilot project for India, it would be the world's first carbon credit project that is linked to an ongoing watershed management programme.
The broad objective of the bio-carbon CDM project is to sequester greenhouse gases by expanding forestry plantations on mostly degraded lands, apart from creating a carbon sink," said Josserand.
"The carbon revenue will primarily go to the village community and provide an incentive to protect watershed and forests," said Rajan Samantraray, World Bank team task leader of the project.
Under this agreement, benefit accruing to the community and private landholders will be about Rs2,500 per hectare, depending on growth of trees and other factors.