Union ministries of power and environment, forests & climate change will develop a carbon credit trading scheme for decarbonisation.
The government plans to develop the Indian Carbon Market (ICM) where a national framework will be established with the objective to decarbonise the Indian economy by pricing the Green House Gas (GHG) emission through trading of the carbon credit certificates, a power ministry statement said.
The Bureau of Energy Efficiency under the Ministry of Power along with the Ministry of Environment, Forest & Climate Change are developing the Carbon Credit Trading Scheme.
A one-day ‘Stakeholder Consultation on Accredited Carbon Verifiers under ICM’ was organised in the national capital on Thursday.
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Currently, India has an energy savings-based market mechanism and the new avatar scheme will enhance the energy transition efforts with an increased scope that will cover the potential energy sectors.
For these sectors, the GHG emissions intensity benchmark and targets will be developed, which will be aligned with India’s emissions trajectory as per climate goals, as per the statement.
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.
“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 investments required by Indian economy to transition toward low-carbon pathways,” Abhay Bakre, Director General of BEE, said.
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The ICM will develop methodologies for the estimation of carbon emissions reductions and removals from various registered projects, and stipulate the required validation, registration, verification, and issuance processes to operationalise the scheme.
Monitoring, Reporting, Verification (MRV) guidelines for the emissions scheme will also be developed after consultations.
A comprehensive institutional and governance structure will be set up with specific roles of each party involved in the execution of the ICM.
The ICM will mobilise 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.