Carbon Credit Trading Scheme will enhance the energy transition efforts

ICM will help India reach the NDC objective of a 45 percent reduction in GDP emissions intensity from 2005 levels by 2030.

The government intends to create the Indian Carbon Market (ICM), where a legal framework will be formed with the goal of decarbonizing the Indian economy by putting a price on Green House Gas (GHG) emissions through the trading of carbon credit certificates. The Carbon Credit Trading Scheme is being created for this purpose by the Bureau of Energy Efficiency, the Ministry of Power, and the Ministry of Environment, Forestry, and Climate Change. Participants from important stakeholders, such as accredited energy auditors, carbon/energy verifiers, sector experts, etc., were invited to a one-day “Stakeholder Consultation on Accredited Carbon Verifiers under ICM” that was held in New Delhi.

Since India already has a market mechanism based on energy savings, the new carbon credit trading scheme would strengthen efforts to transition to a more sustainable form of energy by expanding the focus to include all possible energy sectors in India. In order to meet the climate goals, GHG intensity benchmarks and targets will be created for these sectors and will be in line with India’s emissions trajectory. Based on how well these sectoral trajectories are doing, carbon credits will be traded. Additionally, it is anticipated that a voluntary system will be developed concurrently to stimulate GHG reduction from non-obligated industries.

Abhay Bakre said, “The ICM will enable the creation of a competitive market that can provide incentives to climate actors to adopt low-cost options by attracting technology and finance towards sustainable projects that generate carbon credits. It can be a vehicle for mobilising a significant portion of the investments required by the Indian economy to transition towards low-carbon pathways.”

In addition to defining the necessary validation, registration, verification, and issuance processes, the ICM will create a methodology for estimating carbon emissions reductions and removals from various registered projects. Guidelines for the emissions scheme’s monitoring, reporting, and verification (MRV) will also be prepared after consultation. The establishment of an extensive institutional and governance structure with clear roles for each stakeholder participating in the implementation of ICM is planned. All entities will have their capacities built for upskilling in the subject matter.

Through the purchase of emission credits by both public and private enterprises, the ICM will activate new mitigation alternatives. In a developing economy like India, a well-designed, competitive carbon market mechanism would facilitate the sector-wide and entity-level reduction of GHG emissions at the lowest possible cost and accelerate the adoption of clean technologies.

With its ambitious Nationally Determined Contributions (NDC), India has been at the forefront of the fight against climate change. The government is creating the ICM to make it easier to reach current goals as well as India’s upgraded climate commitments. The ICM will help to accomplish the NDC goal of reducing the GDP’s emissions intensity by 45 percent compared to 2005 levels by accelerating the transition to a low-carbon economy.