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Potential of Blue Carbon in India’s Voluntary Carbon Market
The Missing Piece: Blue Carbon in India’s Voluntary Carbon Market
Context: In the global effort to combat climate change, a crucial natural ally is being overlooked — blue ecosystems.
What is Blue Carbon?
- Definition: Carbon stored in coastal and marine ecosystems — mangroves, seagrass meadows, and tidal marshes.
- Carbon Storage: These ecosystems store 33 billion metric tonnes of carbon, which is 81% of global emissions from 2023.
- Term Origin: Coined in 2009 to highlight degradation of marine ecosystems and their carbon storage potential.
- Global Footprint: Blue carbon projects are active in 29 countries, covering ~1 million hectares.
India’s Untapped Opportunity
- India’s coastline spans over 7,500 KM, with significant mangrove and seagrass coverage, yet blue carbon remains underutilised in India’s Voluntary Carbon Market (VCM).
- Scientific evidence strongly supports the value of blue ecosystems in climate mitigation. For instance, 1 sq. metre of seagrass removes 3x more carbon annually than tropical rainforests—India has yet to tap into blue carbon’s potential.
- Nearly 50% of historical soft-sediment habitats have already been lost, and blue carbon credits remain overshadowed by land-based projects that are often more straightforward, cost-effective, and scalable.
Barriers to Blue Carbon Credit Adoption
- Fragmented Institutional Framework: A major obstacle is the lack of a coherent institutional environment.
- Unlike land-based carbon projects, blue carbon initiatives fall under overlapping jurisdictions — including the Ministry of Environment, Forest and Climate Change (MoEFCC), State Coastal Zone Management Authorities (SCZMAs), Forest Departments, and Fisheries Departments.
- The absence of a unified governance model delays approvals and creates ambiguity over carbon rights, particularly in ecosystems considered common property or protected areas.
- Additionally, there are no clear benefit-sharing frameworks to ensure local communities — who play a critical role in conservation — receive fair compensation from carbon revenues.
- Drawing lessons from REDD+ (Reducing Emissions from Deforestation and Forest Degradation), it’s evident that such mechanisms are essential for project longevity and community engagement.
- Unlike land-based carbon projects, blue carbon initiatives fall under overlapping jurisdictions — including the Ministry of Environment, Forest and Climate Change (MoEFCC), State Coastal Zone Management Authorities (SCZMAs), Forest Departments, and Fisheries Departments.
- Weak MRV Infrastructure: Measurement, Reporting, and Verification (MRV) — essential for ensuring the credibility of carbon credits — remains underdeveloped for blue carbon.
- Compared to land-based projects, blue carbon MRV is costlier, slower, and demands niche expertise.
- India currently lacks a standardised MRV system for marine ecosystems, often relying on international protocols such as Verra’s Verified Carbon Standard (VCS), which increases project costs and delays.
- Moreover, baseline data on the spatial extent and ecological condition of mangroves, seagrass, and tidal marshes is limited, leading to scientific uncertainty that deters investment.
- Environmental Volatility: Blue carbon ecosystems are highly dynamic and more vulnerable to climate-related threats than terrestrial forests. Sea-level rise, ocean acidification, and extreme weather events can all undermine carbon permanence — a critical parameter in the carbon market. These risks make investors hesitant, fearing credit devaluation if ecosystems degrade.
Pathways to Unlock Blue Carbon Potential
- Despite the challenges, several institutional and financial innovations can pave the way for scaling blue carbon projects in India:
- Financing Through Blue Bonds: India can follow the example of the Seychelles Blue Bond, which raised $15 million for marine conservation through a blended finance model supported by the World Bank and The Nature Conservancy.
- With a successful precedent in green municipal bonds — such as Vadodara’s 2024 bond for sustainable water infrastructure — states with rich coastal ecosystems could issue blue muni bonds linked to carbon credit revenues.
- Strengthening MRV Through Innovation: India can look to Indonesia, where the Peat and Mangrove Restoration Agency (BRGM) has partnered with academic institutions to refine baselines and standardise MRV protocols. Formalising similar practices under India’s Green Credit Programme can provide legitimacy and cost efficiency for domestic projects.
- Establishing a Central Blue Carbon Authority: To address the problem of regulatory fragmentation, India should establish a centralised institution — akin to the National Institutes of Wind, Solar, and Bioenergy — dedicated to blue carbon. Such an entity could coordinate inter-agency collaboration, streamline project approvals, and act as a hub for research and MRV standardisation.
- Building Climate-Resilient Frameworks: Adopting adaptive management strategies, as done in Indonesia, can mitigate environmental volatility.
- Linking community-led conservation with scientific monitoring ensures continuity even under climate stress.
- India could also explore buffer credit mechanisms — risk reserves mandated by VCS in afforestation projects — to enhance investor confidence in blue carbon initiatives.
- Exploring Climate Insurance Models: Parametric insurance models like the MAR Insurance Programme in the Caribbean offer a way to safeguard blue carbon projects from climate-induced losses. Introducing similar frameworks in India could stabilise financial flows and make blue projects more appealing to private players.
