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How to Trade Carbon Credits Using Electric Vehicle Charging
Simran Kaur
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Published on 4th Jun 22
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How to Trade Carbon Credits Using Electric Vehicle Charging

The planet is currently on the brink of a climatic catastrophe. The fight against climate change has evolved into a global priority, and nations are cooperating in an effort to mitigate the potentially catastrophic effects of this existential threat.

Exactly a year ago, a number of countries, including India, made commitments to work towards achieving net-zero emissions. Since then, Electric vehicles (EVs) have been experiencing a full throttle push and broad acceptance due to the near-zero emission capabilities that they offer. Nearly every automobile manufacturer in the world is in a hurry to get an electric vehicle (EV) on the market.

How can the electric vehicle sector earn carbon credits?

There is a dearth of comprehension of the process by which the sector might produce carbon credits. Carbon credit can initially be explained in its most basic form as follows: It is one of the legally marketable certificates that is used the most frequently to counteract the effects of glasshouse gas emissions.

One metric tonne of carbon dioxide that is removed from the atmosphere or sequestered through the use of carbon credits is equal to one carbon credit. In the context of electric vehicles (EVs), carbon credits are produced by replacing vehicles that run on fossil fuels with electrified vehicles that have much lower emission levels and receive their electricity from renewable energy projects or fuels that have a lower carbon intensity.

Emission reduction in the case of electric vehicles (EVs) is also computed using the basic framework of tracking baseline, project, and leakage emissions, just like it is in any other carbon offset project.

Although electric vehicles produce insignificant emissions due to leakage, baseline emissions are measured using the emissions produced by a conventional fossil fuel car with the same features.

The term "project emission" refers to the emissions produced by the EV ecosystem as a whole, and it takes into account the emissions caused by the generation of the power necessary to charge batteries.

The Clean Development Mechanism (CDM) and Voluntary Carbon Standards are the two methods that are utilised by the electric vehicle sector in order to generate carbon credits (VCS).

While the methodology that is available in CDM is used for the operation and/or charging of electric and hybrid vehicles in order to provide passenger and/or freight transportation services, the methodology that is already available in VCS is used for project activities such as the installation of charging stations and associated infrastructure.

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Carbon credits have the potential to encourage the expansion of electric vehicles.

Charging stations are eligible for carbon credits because they supply electric vehicles with renewable power. The owners of charging stations have the potential to achieve a higher return on their investments by generating additional revenues from the sale of carbon credits.

Charging station owners should engage climate specialists who can help them register and evaluate their charging stations for credit production and monetisation because this idea is relatively new, and there is a lack of clarity on the process and pricing.

Although this will have the direct effect of lowering the environmental impact of the use of fossil fuels, it will also have the indirect effect of opening up prospects for more climate action by attracting investment and increasing the scalability of the electric vehicle industry.

The industry will be able to get an increased amount of cash as a result of the carbon credits being monetized, which will also encourage other enterprises to enter the market. Increasing the number of charging stations available will make it easier for more electric vehicles to enter the market.

Putting India on the map of the world's environment with electric vehicle credits

Despite the fact that electric vehicle emissions are a great amount lower than those of conventional vehicles, these emissions are significantly higher in India due to the fact that charging systems utilise grid electricity.

If providers of charging infrastructure in India can make the conversion to renewable energy sources such as solar, then project emissions can be cut down to zero, which will allow the electric vehicle industry to earn larger carbon credits.

India's per-capita transport emission inventory is one of the lowest in G20 countries; however, the country's per-capita emissions growth (28 percent) is the highest due to rapid urbanisation and enhanced affordability towards personal mobility, which is fuelled by a lack of efficient and convenient public or mass transportation.

The role of carbon credits needs to be effectively studied in order to fulfil India's commitment to decarbonization and to steer development towards green growth. This would allow India to meet its goal of achieving green growth.

In India's effort to electrify the transportation industry using cutting-edge technologies and increase the amount of foreign direct investment it receives, only an increase in the number of carbon credits generated by the EV ecosystem could be helpful. What are your views on this?

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