Keeping tabs on carbon with an accounting system

Keeping tabs on carbon with an accounting system

Keeping tabs on carbon with an accounting system

Context:

The climate polycrisis, signifies a web of interconnected climate-related crises affecting various sectors. It encompasses the physical impacts of climate change, such as rising temperatures, sea-level rise, and extreme weather events. These, in turn, spawn social, economic, and political challenges. In India, the climate polycrisis weaves through seemingly unrelated sectors like energy, infrastructure, health, migration, and food production.

Relevance:

GS-01, GS-03 (Climate Change, Environmental Pollution & Degradation, Conservation)

Mains Question:

How can a National Carbon Accounting (NCA) system play a pivotal role in addressing the climate polycrisis, and what are its potential implications for India’s sustainable development? (150 words)

Dimensions of the Article:

  • Recognizing Complexity and Interconnectedness
  • National Carbon Accounting (NCA) System
  • Carbon Accounting in Public Finance
  • Goals and Predictions with NCA

Recognizing Complexity and Interconnectedness:

  • The climate polycrisis necessitates a holistic approach. Unlike addressing climate change sector by sector, which leads to unforeseen consequences, it needs comprehensive transformation.
  • This transformation lays the groundwork for a new eco-conscious economy, akin to the role digital infrastructure plays in modern startups and public services.
  • Measuring carbon emissions emerges as the initial step. Without measurement, one cannot account for emissions. Just as we maintain financial balance sheets, carbon accounting becomes essential. Existing methods, like those advocated by Karthik Ramanna at Oxford, track corporate carbon balance sheets.

National Carbon Accounting (NCA) System:

  • An NCA system extends these ideas, unifying the nation, starting from individuals to households, under a single carbon accounting framework. This shift marks a profound change in how we view all human and non-human activities.
  • This revolutionizes public finance as carbon becomes visible, valued, accounted for, and taxed.

Carbon Accounting in Public Finance:

  • Public finance drives development, funded through taxes. Money accounting, from individual spending to central banks like the Reserve Bank of India, monitors the flow of money, enabling public finance.
  • In contrast, carbon stocks and flows remain untracked. This absence hinders progressive carbon taxation.
  • An NCA makes carbon tracking mandatory for businesses and individuals, rendering carbon circulation visible, and allowing goods and services to be ‘financed’ using carbon surpluses.

Goals and Predictions with NCA:

  • With NCA, once can set targets, predict emission reductions, and monitor progress. It may also envisage a national carbon budget reshaping the entire economy, with a parallel goal of reducing carbon GDP alongside the traditional economic GDP.

Polysolution Approach:

  • NCA offers a polysolution to the polycrisis. It not only aids India in achieving its net-zero commitment by 2070 but also fosters new livelihoods and economic organization. By revealing the carbon footprint of activities, it aligns development with ecological sustainability.

Conclusion:

A National Carbon Accounting system emerges as a pivotal solution, enabling comprehensive measurement, tracking, and reduction of carbon emissions. This approach not only aligns with India’s net-zero commitment but also opens up new possibilities for sustainable development and economic growth. It’s a practical step towards addressing the intertwined challenges posed by climate change and creating a more resilient and equitable future.