Keeping tabs on carbon with an accounting system

Source: The post is based on the article “Keeping tabs on carbon with an accounting system” published in “The Hindu” on 5th October 2023.

Syllabus: GS3- environment- climate change

News: The article discusses the idea of a national carbon accounting system in India. This would track and manage all carbon emissions and transactions in the country, encouraging a more responsible and sustainable approach to dealing with the multifaceted climate crisis by integrating carbon management into the economy and policymaking.

What is the Climate Polycrisis?

The Climate Polycrisis, a term highlighted by Adam Tooze, represents multiple, interconnected crises stemming from climate change, affecting numerous sectors globally and in India, such as:

Physical Impacts: This involves rising temperatures, escalating sea-levels, and increased extreme weather events, which individually and collectively pose challenges across various domains.

Socio-economic Challenges: Sectors including energy, infrastructure, health, migration, and food production in India are intricately linked and impacted by climate change, necessitating comprehensive and interconnected solutions.

Holistic Approach: Addressing the polycrisis requires a holistic strategy that considers all physical impacts and the resulting socio-economic challenges, ensuring solutions are resilient, equitable, and just across all sectors.

What is Carbon Accounting?

Tracking Carbon: Carbon Accounting involves monitoring and managing carbon emissions and transactions.

Individual to National Level: It considers carbon flows from individuals to the entire nation, aiming to measure all emissions and interactions involving carbon.

Carbon Balance Sheets: Karthik Ramanna at Oxford has created methods for tracking carbon balance sheets at the corporate level, which can record and manage a company’s carbon transactions.

National Carbon Accounting (NCA): The concept involves extending carbon accounting to an entire nation, requiring both individuals and businesses to declare their carbon inflows and outflows, making carbon circulation visible and accountable.

What could be the implications of carbon management?

New Financial Structure: Envision a future where carbon tax returns might be filed, potentially alongside or instead of income tax returns, thereby altering public finance dynamics.

Developmental Activities Funding: The method of allocating funds for different developmental activities might experience a shift, with carbon management influencing budget allocations and policy-making.

Influence on Public Finance: By making carbon transactions visible through accounting, public finance and budgeting could integrate carbon management, potentially funding goods and services using carbon surpluses.

Alignment with Sustainability: A National Carbon Accounting (NCA) system could lead to an alignment between development and ecological sustainability, offering a new form of public discourse that transparently highlights the carbon implications of various activities.

How can an NCA system be a solution?

An NCA system can help track and manage India’s carbon usage and emissions.

It makes the carbon transactions of individuals and businesses visible and can influence the economy and policies to reduce overall carbon emissions, helping India reach its goal to become net zero by 2070.

This approach may also create new jobs and organize society and the economy in environmentally sustainable ways.