India to develop Carbon Credit Market to meet climate targets

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New Delhi: In a bid to meet climate targets, the government plans to develop the Indian Carbon Market (ICM), with an objective to decarbonize the economy by pricing the Green House Gas (GHG) emissions through trading of the Carbon Credit Certificates.

Carbon markets are trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions.

In view of this, the Bureau of Energy Efficiency, Ministry of Power, along with the Ministry of Environment, Forest & Climate Change are developing the Carbon Credit Trading Scheme for this purpose.

A one-day ‘Stakeholder Consultation on Accredited Carbon Verifiers under ICM’ was organized in New Delhi.

Speaking at the event Abhay Bakre, DG BEE ,“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 mobilizing a significant portion of investments required by Indian economy to transition toward low-carbon pathways,” he said.

Bakre further added that this consultation will give specific guidance for developing MRV process and define eligibility criteria for Accredited Carbon Verifiers (ACVs).

India has been at the forefront of climate action to meet climate goals through its ambitious Nationally Determined Contributions (NDC).

To facilitate the achievement of India’s enhanced climate targets and to meet the future goals, the government is developing the ICM.

By accelerating the transition to a low carbon economy, the ICM will facilitate achieve the NDC goal of reducing Emissions Intensity of the GDP by 45 percent by 2030 against 2005 levels.

The Ministry of Powe said, “As India currently has an energy savings-based market mechanism, the new avatar Carbon Credit Trading Scheme will enhance the energy transition efforts with an increased scope that will cover the potential energy sectors in India”.

For these sectors, GHG emissions intensity benchmark and targets will be developed, which will be aligned with India’s emissions trajectory as per climate goals.

The trading of carbon credits will take place based on the performance against these sectoral trajectories.

Further, it is envisaged that there will be a development of a voluntary mechanism concurrently, to encourage GHG reduction from non-obligated sectors.

It said the monitoring, reporting, verification (MRV) guidelines for the emissions scheme will also be developed after consultation.

A comprehensive institutional and governance structure will be setup with specific roles of each party involved in the execution of ICM. Capacity building of all entities will be undertaken for up-skilling in the subject matter.

The ICM will mobilize new mitigation opportunities through demand for emission credits by private and public entities.

A well-designed, competitive carbon market mechanism would enable the reduction of GHG emissions at the least cost, both at the level of entity, as well as the overall sector and drive faster adoption of clean technologies, in a growing economy like India.

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