Centre to develop carbon markets for green sectors, ET EnergyWorld

India plans to develop carbon markets for renewables, green hydrogen, bio-fuels and clean mobility to facilitate carbon trading between green and polluting sectors.

The Niti Aayog is drawing up a framework to expedite their development, a senior government official told ET.

“Sale of carbon credits will help generate revenue, which can thus be used to fund sustainable energy projects and other environmental initiatives,” the official said.

The government is of the view that the growth of carbon markets will also create job opportunities and stimulate economic activity, the official said.

Initially such markets could be voluntary carbon markets, which means the issuance, buying and selling of carbon credits will be on a voluntary basis. However, over a period of time the government could put in place a regulatory framework to develop compliance markets, which compel industries to trade carbon credits, thereby generating revenue.

According to an official, carbon trading is needed as all countries including India are short on investments in green energy and the greenhouse gas emissions continue to rise though at a slower pace.

A report released at the COP27 climate conference in Egypt last year said India recorded the highest growth rate in carbon emission among the world’s major warming contributors. It had projected India’s emissions to increase by 6 per cent and that of the US by 1.5 per cent while China and the European Union (EU) are projected to reduce their emissions by 0.9 per cent and 0.8 per cent, respectively.

According to the United Nations Development Programme, carbon markets are trading systems in which carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions.

One tradable carbon credit equals one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered or avoided. When a credit is used to reduce, sequester or avoid emissions, it becomes an offset and is no longer tradable.

As per the International Energy Agency, emissions of the climate-warming gas that were caused by energy production grew 0.9 per cent to reach 36.8 gigatons in 2022.

Though India’s per capita emission was substantially lower at 1.9 tonnes in 2021, the country is fourth largest global emitter with 7.5 per cent of the global emissions, after China (31 per cent), the US (14 per cent) and the EU (7.7 per cent).

  • Published On Jul 8, 2023 at 08:32 AM IST

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