In what could be a leading initiative, State Bank of India plans to help farmers buy fuel-saving equipment that could generate as many as 25 million carbon credits, potentially one of the country’s biggest offset projects to date, according to a Bloomberg report. State Bank has agreed to lend Rs 17 crore to 20,000 farmers for plants that convert cow dung and kitchen waste into clean cooking gas, reducing their need to burn fossil fuels.
The scheme will be expanded to 500,000 farmers over the next three years.
Soot is believed to be the biggest contributor to global warming after carbon dioxide, according to the Worldwatch Institute. About 60% of households in India burn wood, manure and crop waste for cooking and heating.
The farmers will receive income from selling UN-certified emission reduction credits generated by the project to pay back their loans. The project may earn as many as 2.5 million credits annually for 10 years.
UN CER credits traded at around 13 euros on the European Climate Exchange.
The State Bank project is under validation by the United Nations Framework Convention on Climate Change, the last step before approval. More banks can join to finance many other clean energy programmes and demand side management programmes. Finance issues can be sorted out this way!
In the US, a social enterprise Energy in Common facilitates individuals to provide small loans to the poor who plan to go green. The EIC calculates the carbon offset from the loan and sells the same to the lenders. They plan to extend green energy access to 15 million people in 5 years!
It is the right time for innovations in financing.
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