India’s Evolving Carbon Market
Source: DTE
GS III: Environment and Conservation
What is discussed under India’s Evolving Carbon Market?
- Carbon Markets
- Key Highlights of the News
Why in News?
To assist the nation in making its nationally determined contributions (NDC), the Indian government is taking efforts to create a market for carbon credits.
Carbon Markets
- Carbon markets are trading platforms where carbon credits are offered for sale and purchased.
Photo by Callum Shaw on Unsplash - One tonne of carbon dioxide or the equivalent quantity of another greenhouse gas reduced, stored, or avoided is equal to one trading carbon credit.
- Carbon markets may be essentially divided into two categories:
- Compliance
- Voluntary
- Any national, regional, and/or worldwide policy or regulatory need generates compliance markets.
- National and international voluntary carbon markets relate to the voluntary issuing, purchase, and sale of carbon credits.
Examples
- Emissions trading systems (ETS):
- It is a type of compliance market.
- Operates on a ‘cap-and-trade’ principle.
- The European Union launched the world’s first international ETS in 2005.
- The world’s largest ETS, projected to cover around one-seventh of worldwide carbon emissions from the combustion of fossil fuels, was introduced by China last year.
- There are currently many more running or being developed national and subnational ETS.
- Clean Development Mechanism (CDM)
- Adopted under the Kyoto Protocol in 1997.
- It is a type of international compliance market.
- Carbon credits from emission-reduction initiatives in developing nations under the CDM have been utilised by developed nations to partially achieve their emission-reduction objectives.
Key Highlights of the News
- The leftover credits may be sold in bulk to other nations that will profit from them if the nation’s NDC objectives are met.
- Only one tonne of carbon dioxide or any other greenhouse gas may be released at a time under a single carbon credit permit.
- Since the national government announced its goals to attain Net Zero by 2070, there have been rumours circulating regarding the nation’s intention to concentrate on carbon credits.
- In August 2022, the Lok Sabha approved the Energy Conservation Amendment bill, opening the door for the creation of a market for carbon credits.
- It will be helpful if the carbon initiatives are dispersed, allowing for more widespread mitigation activities.
- Through the creation of several mitigation outcomes connected to a single carbon market, will enable greater penetration of the domestic carbon market.
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