Environmental Commodities Are Financial Instruments: Neelesh Agrawal, Calculus Carbon

Environmental commodities are financial instruments that can be increasingly used to mobilise capital towards targeting specific attributes of the overall, environmental, social and governance (ESG), said Neelesh Agrawal, Founder of Calculus Carbon, on Tuesday.

Agrawal was speaking at the Sustainable World Conclave 2023, organised by BW Businessworld in New Delhi.

“Plastic credit is a concept that's not old but still contributes to nearly 88 per cent of projects in the pipeline,” he added. "Historically, Australia and Thailand are ahead in the plastic credit segment, but soon India will be the next big player in the market."

The Calculus Carbon Founder stated that the carbon credit market has picked up largely in last two years and underlined the fact that in coming years our country will contribute to nearly 3 per cent of the total carbon market globally.

According to the latest report by Morgan Stanley, the carbon market across the world is estimated to grow by USD 100 billion. Meanwhile, Mckinsey predicts it to rise by USD 50 billion, added Agrawal, pinning the hope on India’s positive progress in the carbon credit business.

He said the carbon credit market is moving more towards non-renewable energy demand and energy efficiency which includes projects such as LED bulbs and cooking stoves etc. This has even contributed to a significant shift of stake holders in the carbon market.

Furthermore, Agrawal underlined the downfall of the carbon credit market in 2021 which occurred as a result of a nodal agency's problems, which issues nearly 75 to 80 per cent of carbon credits. He stressed that the agency’s own bottleneck admittance caused the decline.

Commenting on the upcoming carbon market compliance, he said, India has recently begun taking compliance seriously and this will further mature by the year 2026. "In India, we don’t have compliance like in Europe where a company from Amsterdam can only invest in carbon projects of European countries. Our nation is more flexible this term," he said.

On the whole, Agrawal highlighted the biggest shift India is likely to experience in the carbon credit markets.