Carbo credit trading scheme notified in India

The Union ministry of power has notified the much-anticipated carbon credit trading scheme.

The notification said the Centre will constitute a “National Steering Committee for the Indian carbon market” to govern and oversee the functions of the market. The secretary, ministry of power will be the ex-officio chairperson, while the secretary for the ministry of environment, forest and climate change will be the co-chairperson.

The committee will also have members from the ministries of finance, new and renewable energy, steel, coal and petroleum, and Niti Aayog among others. The steering committee will recommend the Bureau of Energy Efficiency for the formulation and finalisation of procedures for institutionalizing the Indian carbon market and formulation of greenhouse gas emission targets for “obligated entities”.

The Central Electricity Regulatory Commission (CERC) has been mandated to regulate the market. It will register the power exchanges and approve the carbon credit certificate trading in the Indian carbon market from time to time. “The power exchange shall seek approval of the Commission for their respective bylaws and rules for trading of certificates in the power exchange. The power exchanges shall perform functions regarding trading of carbon credit certificates, in accordance with the regulations notified by the commission.”

Further, BEE would constitute, technical committees for different areas as required under compliance mechanism for the purposes of this scheme.

The power ministry would decide on the sectors to be included under compliance mechanism of the Indian carbon market on the basis of the recommendations of BEE. The bureau would also develop the trajectory and targets for the entities under compliance mechanism.

Under the compliance mechanism, “the ministry of power, after duly considering the recommendations of Bureau and National Steering Committee for Indian carbon market, shall recommend the notification of greenhouse gases emission intensity targets to the ministry of environment, forest and climate change for notification under the Environment Protection Act, 1986″.

According to experts, a carbon market would help as many leading Indian corporates have made commitments to become carbon-neutral and the market will provide flexibility to entities in hard-to-abate sectors and with high reduction costs to supplement their own reduction efforts with credits from the carbon market.

The market is expected incentivize entities with low reduction costs to reduce emissions beyond their mandate and trading in the carbon market could reduce the overall cost of emission reductions in India.