Carbon Credit

• As trees grow, they capture carbon dioxide from the atmosphere and store it in their biomass and soil.
• One metric ton of CO2 captured by a forest is equivalent to one carbon credit.
• Industries, companies, and governments can purchase carbon credits to offset their emissions.
• Carbon is traded through the Voluntary Carbon Market or the Compliance Market.

Voluntary Carbon Market

• The voluntary carbon market enables private investors, governments, NGOs, and businesses to voluntarily purchase carbon credits to offset their emissions.
• The value of VCM has reached to 2 billion USD in 2021-22.
• It may reach to 40 billion USD by 2030 (Source: Ecosystem market place 2022).
• Buyers: Microsoft, Google, Apple, Aviation Industries, Hotel chains, Multinational Corporations, Industries etc.

VCM Projects in Pakistan

S.No	Project	Category	Location	Credits per year (million)	Estimate Value per year(million $)
1.	Delta Blue Carbon-1	Forestry	Sindh	2.407	24.07*
2.	Kohinoor Mapple Leaf Group	Energy	Punjab	0.018	0.055**
3.	Composting of organic waste	Waste	Punjab	0.078	0.235
4.	DGKCC Solid waste management	Waste	Punjab	0.040	0.122
5.	Wind Power Project	Energy	Sindh	0.105	0.315
6.	Pak-Arab Fertilizer	Energy	Punjab	0.119	0.358
7.	Wind Power Project FFCEL	Energy	Sindh	0.91	0.273

*@USD 10 per credit

**@USD 3 per credit

VCM Case Study: Indus Delta Carbon Project, Sindh

• The Project is based on a Public-Private Partnership (PPP) between the Government of Sindh and a British Firm, Indus Delta Capital (IDC).
• Agreement in 2015 after proper approval from the CM Sindh in consultation with the Law & Finance Departments.
• Area: 350,000 ha of Mangrove Forest
• Period: 60 years
• Investment: IDC will invest 60 million USD in 60 years
• Carbon Credits: 142 million over 60 years
• Distribution of Benefits: 60% of the revenue generated from the sale of carbon credits will go to IDC, and 40% to the Sindh Government.

Engagement of the Private Sector

The government may enter into a partnership with a private party like Global Assistance Program (GAP having the requisite technical and financial resources to fulfill the whole spectrum of requirements, including the following:

• Completing the requirements of the Project.
• GAP will do a feasibility study and will use the existing feasibility for the identification and mapping of potential areas for different types of carbon projects for the voluntary carbon market and the compliance market of the Article 6 Framework
• Providing the cost of PDD development, registration, validation, verification & issuance.
• Bearing the cost of plantations in new areas, maintenance of plantations, and activities of REDD and IFM in the project areas.
• GAP will get a share in the carbon revenue to be agreed upon by both parties.