India is gearing up for its first carbon credit sale, with the Food Corporation of India (FCI) playing a crucial role. The government plans to leverage FCI's optimized logistics and digital transformation efforts, which have significantly reduced greenhouse gas emissions. This initiative is part of India's broader strategy to meet its emission reduction targets under the Paris Agreement.
The carbon credits generated from these efforts will be sold, providing a financial incentive for further sustainability initiatives. This move is expected to promote cleaner technologies and practices across various sectors.
India's carbon credit trading scheme, established under the Energy Conservation (Amendment) Act, 2022, aims to create a domestic carbon market. This market will incentivize emission reductions by allowing companies to trade carbon credits, thus encouraging them to adopt more sustainable practices.
The Food Corporation of India (FCI) is playing a pivotal role in the Indian government’s first carbon credit sale. By optimizing its logistics operations, FCI has significantly reduced its greenhouse gas emissions. This includes digital transformation initiatives that streamline supply chain operations, reduce transportation distances, and improve overall efficiency.
The carbon credits generated from these emission reductions will be sold, providing a financial incentive for further sustainability efforts.
It’s a significant step towards achieving carbon neutrality and promoting sustainable practices in India’s foodgrain management system.
The FCI has implemented several measures to optimize its logistics, focusing on improving efficiency and reducing emissions. FCI has adopted digital tools to streamline its supply chain operations. This includes real-time tracking of foodgrain movement, automated inventory management, and predictive analytics to forecast demand and optimize storage and distribution
By optimizing routes and consolidating shipments, FCI has reduced fuel consumption and transportation costs. This not only lowers emissions but also ensures timely delivery of foodgrains.
Moreover, FCI is incorporating sustainable practices such as using energy-efficient equipment and renewable energy sources in its operations. This further contributes to reducing the carbon footprint.
Besides, the FCI is also working with various stakeholders, including state governments and private partners, to implement best practices in logistics and supply chain management. Additionally, it provides training to its staff on sustainable practices and efficient resource utilization.
FCI maintains a vast network of storage facilities across the country, including warehouses and silos, to store the procured food grains.
Established in 1965 under the Food Corporations Act, 1964, the FCI operates under the Ministry of Consumer Affairs, Food and Public Distribution. FCI’s primary mandate is to ensure the food security of India by managing the procurement, storage, and distribution of food grains, primarily wheat and rice.
In April this year, the Indian government has significantly increased FCI’s authorized working capital to ₹21,000 crore from ₹10,000 crore. This financial boost is aimed at minimizing borrowings and interest payouts, and funding a planned modernization drive. The additional capital will help FCI enhance its storage facilities, improve transportation networks, and adopt advanced technologies.
Later in July, the Union government has restructured FCI’s funding, allowing it to operate without taking on new debt for the first time. This move expected to cut interest payments by a tenth and smoothen the flow of funds, ensuring more efficient operations.
Notably, the Indian government has several plans and initiatives related to carbon credit sales and the development of a domestic carbon market.
Last year in June, the Ministry of Power has notified the Carbon Credit Trading Scheme, 2023, which aims to establish a domestic carbon market. This scheme sets the framework for trading carbon credits, with the Bureau of Energy Efficiency (BEE) acting as the administrator and the Central Electricity Regulatory Commission (CERC) overseeing the trading process.
Besides, the country is also working towards launching a national carbon market to drive down fossil fuel use. This market will allow polluters to exchange credits equivalent to a certain amount of emissions, incentivizing companies to reduce their carbon footprint
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