India’s Progress in the Carbon Market: A Detailed Overview

Carbon Credits: Laying the Groundwork India is at the forefront of embracing sustainability, with Carbon Credits marking its keystone initiative. These credits operate within the cap-and-trade system, where each credit equates to one tonne of CO2, thus offering a tangible value to carbon emissions. This not only underlines the economic value of sustainable operations but also paves the way for businesses to venture into environmentally friendly practices.

Distinguishing Between Compliance & Voluntary Markets At the core of India’s carbon market are two crucial pillars: Compliance markets and Voluntary markets. While the former is born out of international or national obligations, the latter encapsulates the spirit of proactive and voluntary emission reductions, granting corporations the leeway to strategize their eco-friendly journey.

Regulatory Pathways: The Green Mandate Section 14(w) of the Act embodies India’s green vision. Entrusted with the responsibility to direct the carbon trading scheme, this legislation mirrors India’s ambitious roadmap to integrate and champion global carbon regulation endeavors. Furthermore, its applicability across diverse sectors solidifies its comprehensive outlook.

Blending Policies: A Seamless Transition Strategic policies like the Perform Achieve and Trade (PAT), coupled with the Energy Saving Certificates, represent India’s intricate plan against excessive carbon emissions. These initiatives work hand-in-hand with the broader carbon market, streamlining the transition towards a greener future.

Phase-1: Harnessing Demand in the VCM The first stepping stone in nurturing India’s carbon market lies in augmenting demand within the existing EScerts market. Here, the objective is multi-dimensional: enhancing instrument adaptability, inviting a diverse group of stakeholders, and connecting various Indian markets to the envisioned VCM.

• Key demand stimulants are expected from sources like voluntary buyers, current participants of the PAT Scheme, assimilation of State Designated Agencies into the VCM, and the ever-evolving airlines sector.
• The corporate horizon in India resonates with green aspirations. By integrating global frameworks like SBTi, the corporate landscape can generate a dynamic demand in the evolving market.
• Considering the growing carbon footprint of the aviation industry, it’s imperative to align with international standards, such as the Carbon Offsetting and Reduction Scheme for Aviation (CORSIA). Integrating these stakeholders into the VCM would harmonize international and national efforts, driving demand for emission reduction units (ERU).

Phase-2: Augmenting Supply in the VCM Upon successful completion of phase-1 modifications, the next milestone is to expand the supply within the VCM market. This expansion hinges on effective project registration, thorough validation, verification, and the issuance of emission reduction units (ERU).

• Here, individual activities of participants are accredited. This means that a unique reference is delineated for every specific project. For activities reducing emissions, a straightforward method is adopted by applying a greenhouse gas intensity factor, derived from performance benchmarks. For CCS, the base reference is set at zero sequestration.
• After implementing the above, consistent monitoring of the activity’s performance is crucial. Based on the results, credits will be awarded by the regulatory authorities.
• To receive these credits, project developers have to undergo a meticulous process, ensuring that tangible and measurable emission reductions are accomplished. Each step in this process is pivotal to verify the authenticity and impact of the project.