NEW DELHI : Prime Minister Narendra Modi could launch a national carbon trading platform on August 15 as India pushes ahead with its climate commitments, two people familiar with the development said.
The government could also make guidelines that carbon trading would be mandatory for some sectors.
A carbon market is a trading system where credits are bought and sold, allowing an entity to emit a certain amount of greenhouse gases.
There are generally two types of carbon markets — compliant and voluntary. The Center’s move will make it a compliance marketplace for a number of sectors, the people quoted above said on condition of anonymity.
The carbon market push comes as India aims to make carbon neutral by 2070.
Some companies have announced energy transition goals and are not in line with government plans. A full-fledged carbon market would provide flexibility for businesses in hard-to-retreat sectors to supplement their efforts with credits from the carbon market.
Inquiries were sent to the Prime Minister’s Office, and the ministries of electricity and new and renewable energy remained unanswered as of press time.
This goes against the backdrop of planned amendments to the Energy Conservation Act to mandate the use of clean energy, including green hydrogen, and to establish a regulatory framework for doing business. carbon.
Once the bill provides a legal framework for carbon trading in India, the government will develop guidelines.
Santosh Singh, partner and managing director, climate and agricultural solutions at Intellecap, a consulting firm, said: “The Department of Energy Conservation’s PAT (implement, achieve and commercial) scheme Energy (BEE) and Renewable Energy Certification (REC) schemes provide good experience and a basis for building a carbon market trading platform. “
Sectors such as cement, steel, thermal power plants and fertilizers could be required to trade carbon on the platform, Singh added.
PAT is a market-based mechanism to reduce specific energy consumption in energy-intensive industries.
BEE provides specific energy consumption targets for energy-intensive industries (referred to as designated consumers) depending on their operating parameters.
Carbon markets have proven to be one of the most effective emission reduction drivers, delivering emissions reductions at the lowest cost. Incentives in the form of carbon credits against the deployment of clean technologies lead to private sector participation in climate action.
A recent Intellecap report says carbon credits will incentivize low-cost entities to cut emissions beyond their mandate.
Trading in carbon markets can reduce the overall cost of emissions reductions at the social level in India, it said.
A carbon market can enable India to effectively participate in an interconnected global carbon market.
It can spur innovation and finance clean projects from India’s MSMEs, which have huge scope in reducing emissions. They can also provide greater liquidity for discount certificates from India, encouraging more cuts globally.
The Renewable Energy Certificate (REC) mechanism is a market-based tool to promote renewable energy and facilitate compliance with renewable energy purchasing obligations.
RECs are traded on the Energy Exchange of India and the Electricity Exchange of India Ltd at a price range and a floor price determined by the Central Electricity Regulatory Commission.
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