The setting up of the carbon market is expected to help India fulfill Prime Minister Narendra Modi’s COP26 commitment of achieving net zero target by 2070
The development of a domestic carbon market got a shot in the arm with the government issuing a draft notification titled Carbon Credit Trading Scheme, 2023 (CCTS). A national steering committee (NSC) of 20-22-members, headed by the power and the environment secretaries, has been mandated to provide governance and oversight of the Indian carbon market.
The Bureau of Energy Efficiency (BEE) has been tasked with formulating rules and regulations under the leadership of the NSC. The BEE’s role will extend to setting emission reduction targets and issuing carbon credit certificates. “A carbon credit means a value assigned to reduction or removal or avoidance of greenhouse gas emission and is equivalent to one ton of carbon dioxide equivalent (CO2),” elaborates the notification. Greenhouse gases include CO2, methane, nitrous oxide, hydrochlorofluorocarbons, etc.
Carbon credit certificates would be given to companies, which overshoot their targets. Those falling short of the targets can make up by buying carbon credit certificates from the market.
While the trading activities will be regulated by the Central Electricity Regulatory Commission (CERC), the registry for the carbon market will be maintained by the Grid Controller of India.
The setting up of the carbon market is expected to help India fulfill Prime Minister Narendra Modi’s COP26 commitments of reducing carbon emissions of one billion tonnes and carbon intensity of economy by less than 45 per cent, both by 2030, and achieving net zero target by 2070.
Responding to the development, Manish Dabkara, Chairman and MD EKI Energy Services, and President of CMAI (Carbon Market Association of India (CMAI), said in his communication, “We will be closely monitoring the developments and implementation of the CCTS in the coming times and hope that the government will develop the market with proactive compliance and enforcement mechanism, which will help to a reasonable price discovery and a vibrant operational domestic emission trading market.” He added, “Such a market mobilization will ensure the encouragement of investors for long-term investment in carbon reduction technologies, projects, and processes, towards an accelerated decarburization of country's economy.”
The notification comes soon after a draft notification issued for setting up a Green Credits market, which is over and above carbon credits, also provides for synergy with the carbon market.