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India to Launch Its Own Carbon Market
Context:
India is set to launch its national carbon market, marking a significant milestone in its journey towards achieving ambitious climate goals. It is part of India’s broader strategy to combat climate change and reduce GHG emissions.
More on News:
- This initiative, outlined in the Carbon Credit Trading Scheme (CCTS) notified in June 2023, is designed to set emissions targets for emitters and establish a marketplace where excess emission reductions can be traded.
- The country has been involved in both compliance markets, such as the Perform, Achieve, and Trade (PAT) scheme, and voluntary projects like the Clean Development Mechanism (CDM).
Background and Objectives
- India ratified the Paris Agreement in 2016, committing to limit the global average temperature rise to below 2°C by the end of the century.
- As part of its Nationally Determined Contributions (NDCs), India pledged to reduce the GHG emission intensity of its economy by 33-35% by 2030 from 2005 levels.
- One of India’s key targets is to reduce the “emissions intensity of its GDP by 45% from 2005 levels by 2030.” Additionally, India has committed to achieving net-zero emissions by 2070.
- The need to limit emissions due to global commitments and climate change impacts has led India to introduce new policies and tools, including the Carbon Credit Trading Scheme (CCTS).
Key Highlights:
- The Bureau of Energy Efficiency (BEE), the body responsible for implementing the CCTS, released the compliance procedure for the scheme in August 2024.
- The specific emissions targets that will drive the scheme’s effectiveness have yet to be announced. According to BEE officials, the CCTS is expected to come into force by 2026.
- The European Union’s upcoming Carbon Border Adjustment Mechanism (CBAM), which will impose tariffs on imported goods based on the greenhouse gases emitted during their production, is a significant driver.
- This mechanism, set to be implemented from 2026, aims to level the playing field by adjusting the price of imports according to their carbon footprint.
- The establishment of carbon markets by other developing countries like China and Indonesia has also likely played a role in India’s decision to adopt the CCTS.
Implications:
- Ensuring that the scheme meets its goal of reducing emissions is crucial for its success and for India’s climate objectives.
- As the world moves towards more stringent climate policies, the CCTS represents a vital step in India’s commitment to reducing its carbon footprint and addressing the challenges posed by climate change.
