The new scheme would strengthen efforts to transition to a more sustainable form of energy
The goal of the Indian government's development of the Indian Carbon Market (ICM), which would establish a national framework, is to decarbonise the Indian economy by pricing greenhouse gas (GHG) emissions through the trade of carbon credit certificates. The Carbon Credit Trading Scheme is being developed for this purpose by the Ministry of Power's Bureau of Energy Efficiency in collaboration with the Ministry of Environment, Forestry, and Climate Change. Recently, important stakeholders including accredited energy auditors, carbon/energy verifiers, sector experts, etc. participated in a one-day "Stakeholder Consultation on Accredited Carbon Verifiers under ICM” meeting in the Capital.
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.
“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 the investments required by the Indian economy to transition toward low-carbon pathways,” said Abhay Bakre, DG, BEE. He further added that this consultation will give specific guidance for developing the MRV process and define eligibility criteria for Accredited Carbon Verifiers (ACVs).
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 diverse 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 up in order to gain new skills in the area.
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 uptake 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.
By hastening the shift to a low-carbon economy, the ICM will help accomplish the NDC objective of reducing the GDP's emissions intensity by 45 percent by 2030 compared to 2005 levels.