The union environment ministry has issued a draft notification on greenhouse gases emission intensity (GEI) targets for industries under India’s carbon credit trading scheme. These emission targets are for 2025-26 and 2026-27 for a range of industries under the carbon trading market and suggest that the carbon market will become operational during the period.
The Union government notified the Carbon Credit Trading Scheme in 2023 under the Energy Conservation Act, 2001 which defined the Indian carbon market framework, established for trading of the carbon credit certificates to reduce or remove or avoid the greenhouse gases emissions.
The targets have been issued for three companies in aluminium; 253 in the iron and steel sector; 21 in petroleum refining; 11 in petrochemicals; 11 naphtha ; and 173 spinning/textile units which have registered under the scheme.
The draft notification also states that the obligated entity (company) shall achieve the GEI targets in the respective compliance year as per the schedule provided in the draft notification. They can meet their GEI target for the respective compliance year by purchasing carbon credits certificates from the Indian carbon market, in case they do not achieve the prescribed GEI target. The GEI Targets will be calculated by the Bureau of Energy Efficiency (BEE).
The draft notification also provides for penalty provisions . In case an obligated entity fails to comply with GEI target or fails to submit the carbon credit certificates equivalent to the shortfall , the Central Pollution Control Board (CPCB) will impose Environmental Compensation for the shortfall in the respective compliance year which will be equal to twice of the average price at which carbon credit certificates are traded during the trading cycle of that compliance year. The average price shall be determined by BEE.
{{/usCountry}}The draft notification also provides for penalty provisions . In case an obligated entity fails to comply with GEI target or fails to submit the carbon credit certificates equivalent to the shortfall , the Central Pollution Control Board (CPCB) will impose Environmental Compensation for the shortfall in the respective compliance year which will be equal to twice of the average price at which carbon credit certificates are traded during the trading cycle of that compliance year. The average price shall be determined by BEE.
{{/usCountry}}BEE in a 2023 report said that India has been at the forefront of climate action to meet the global climate goals through its ambitious Nationally Determined Contributions (NDC).
“To facilitate the achievement of India’s enhanced NDC targets, the government has initiated the development of the unified carbon market mechanism ‘Indian Carbon Market’ (ICM) which will mobilize new mitigation opportunities through demand for emission reduction credits by private and public entities,” it added.
A single market at the national level, as opposed to having multiple sectoral market instruments, would reduce transaction costs, improve liquidity, enhance a common understanding and targeted capacity development, and streamline the accounting and verification procedures, it said.
“With the recent announcement of greenhouse gas intensity reduction targets for entities within four more sectors, India is getting closer to the operationalisation of its carbon market. While there is no doubt that this instrument will be effective in achieving the goal of cost effective industrial decarbonisation, the government should now start assessing the impact of potential inclusion of currently excluded power sector within the carbon market’s ambit. If solutions to address the impact on power prices, distribution companies’ revenues and coal capacity to ensure power affordability, reliability and security can be found, the next immediate step should be to include the power sector which will make India’s carbon market even more successful,” said Vaibhav Chaturvedi, Senior Fellow at Council on Energy, Environment and Water.