India gears up to embrace carbon mkt plans

India will put the final pieces in place by the end of October to kickstart a long-awaited domestic carbon market, and a separate United Nations supervised intergovernmental market for trade in emission credits by January, in an attempt to tame criticism that along with acquiring the image of a poster boy of being the world’s fastest growing major economy, it is also getting the distinction of being the world’s fastest growing major emitter.

- S DINAKAR

India’s Carbon Credit Trading Scheme (CCTS) and Article 6, the United Nations supervised voluntary carbon trading system, are critical for India to secure technologies available only with the developed world and arrange funds for ambitious emission reduction programmes, which a recent study by Centre for Social and Economic Progress pegged at $467 billion by 2030 to put four carbon-intensive sectorspower, steel, cement and transport — on a low carbon pathway.

The first phase of India’s compliance regime under CCTS targeting four of India’s high emission sectors — aluminium, cement, chlor alkali, and pulp & paper — and covering 282 units belonging to some of India’s leading conglomerates like Vedanta, Hindalco, UltraTech, and JSW Cement will be officially gazetted by the end of this month, two top government officials told Business Standard on grounds of confidentiality. The second phase covering 253 steel plants, 21 refineries, 11 petchem units and 173 textile units, including companies like Tata Steel, Reliance Industries and Indian Oil among others, will be notified by the end of October, the officials said.

Emissions targets have been announced till 2027, and a new set of targets and sectors will be finalised in FY27 for the FY28-30 period, an official said. But the challenge lies in creating an efficient market for exchange of credits, he added.

“Balancing demand and supply (of carbon credits) in the CCTS comes down to setting intensity targets tight enough to create real scarcity,” said Subham Shrivastava, climate finance analyst, South Asia, Institute for Energy Economics and Financial Analysis. Over time, periodic tightening of benchmarks will be essential, and India can also draw from global practice by adopting stability mechanisms that adjust credit supply if prices collapse or spike.