2014 · GS Paper 3 · Q13 · 12 marks
Should the pursuit of carbon credits and clean development mechanisms set up under UNFCCC be maintained even though there has been a massive slide in the value of a carbon credit? Discuss with respect to India's energy needs for economic growth.
In short
India should retain the CDM and carbon credits as an equity framework and institutional base, but cannot rely on them to finance its energy-led growth. CER prices fell from about €20 in 2008 to under €1 by 2013, while about a third of households lacked electricity in 2011.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 279 words
Clean finance and technology
India is second only to China in registered CDM projects, which helped finance early wind, biomass and waste-heat recovery.
Measurement and institutions
The National CDM Authority (2003) built verification skills that the Perform, Achieve and Trade scheme now uses.
Equity under CBDR
CDM keeps mitigation costs on developed countries, fitting India's per capita emissions of 1.56 tonnes in 2010.
Revenue not bankable
At under €1 a credit, CER income cannot cover registration and verification costs.
Scale of energy demand
Census 2011 found about a third of households without electricity, and energy produced 71% of India's emissions in 2010, so coal remains central and CDM cannot replace it.
Shrinking buyers
Kyoto's second commitment period (2013-20) covers few major emitters, so demand has thinned.
Credibility questions
Additionality doubts, as with HFC-23 credits, weakened trust in CDM projects.
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Question from the official UPSC Civil Services (Main) Examination 2014 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.