India's Initiatives for Carbon Market Development
India is set to implement crucial steps to establish a domestic carbon market and a United Nations-supervised inter-governmental market for emission credits. These efforts aim to handle criticisms regarding India's rapid economic growth coinciding with being a major emitter. The initiatives include the Carbon Credit Trading Scheme (CCTS) and leveraging Article 6 of the Paris Agreement.
Carbon Credit Trading Scheme (CCTS)
- Purpose: The CCTS aims to acquire technologies from developed nations and secure funds for ambitious emission reduction programs, estimated to cost $467 billion by 2030.
- First Phase: Targets high emission sectors: aluminum, cement, chlor-alkali, and pulp & paper. This phase involves 282 units from major conglomerates.
- Second Phase: Includes 253 steel plants, 21 refineries, 11 petrochemical units, and 173 textile units, with companies like Tata Steel and Reliance Industries involved.
- Future Targets: Emissions targets have been announced until 2027, with new targets to be set for FY28-30.
- Market Mechanism: Emphasizes the importance of creating an efficient market for credit exchanges by setting tight intensity targets to create scarcity.
Implementation and Verification
- National Designated Authority (NDA): A 21-member board plays a key role in implementing the CCTS and approving projects for international carbon trading under Article 6.
- Verification Process: Companies will submit emission data, which will be verified before credits are issued and stored in a registry.
- Compliance: Companies that do not meet targets will need to buy credits or face penalties.
Indo-Japan Carbon Credit Mechanism
- Bilateral Agreement: India’s agreement with Japan under Article 6 allows for carbon credits trade, with projects expected to be registered by next year.
- Project Registration: Indian companies must submit detailed project design documents for evaluation, leading to registration and subsequent credit allocation.
- Credit Allocation: Credits are allocated to both Japan and India, contributing to their Nationally Determined Contributions (NDCs).
Global Carbon Credit Context
- Price Comparison: India's carbon credits are expected to be priced at around $15 a tonne. In contrast, China's scheme averages $10 a tonne, and the EU's scheme exceeds $70 a tonne.
This comprehensive plan not only helps India reduce its carbon footprint but also positions it strategically in global climate negotiations by establishing robust mechanisms for carbon credit trading and bilateral cooperation.