India Pioneers Carbon Market Framework for Emission Mitigation

India's progress in carbon market framework marks a crucial development in its emission mitigation strategy, highlighted in the Economic Survey. The Carbon Credit Trading Scheme, introduced in 2023, integrates compliance and offset mechanisms, aiming to transition into a comprehensive operational compliance carbon market by leveraging the existing PAT scheme.

India has achieved significant progress in establishing its carbon market framework, a vital advancement outlined in the Economic Survey released on Thursday. The Carbon Credit Trading Scheme (CCTS), adopted in June 2023, employs a dual mechanism including mandatory compliance and voluntary offset approaches.

Targeting energy-intensive industrial sectors, the compliance mechanism utilizes an emission intensity-based baseline-and-credit system. Sectors such as cement and iron and steel are included, where entities surpassing emission targets earn tradeable Carbon Credit Certificates (CCCs). Conversely, entities failing to meet targets must purchase and surrender credits.

Building on the existing Perform, Achieve and Trade (PAT) scheme, the framework aims for a full operational compliance carbon market. By 2025, Greenhouse Gas Emission Intensity targets are set for aluminium, cement, Chlor-Alkali, and Pulp and Paper sectors. A list of ten sectors has been approved for the offset mechanism, incentivizing climate actions. Globally, systems like the EU, Korea, and China ETS offer insights for domestic carbon markets.