India, one of the world’s largest exporters of carbon credits, plans to launch its own uniform carbon market in a year as a major source of funding for energy transition and emission reduction projects.
According to sources, the federal government is proposing a change in legislation to establish the carbon trading plan, which will include all current tradeable carbon credits. The proposal also includes a closed market that does not allow export of such credits to international carbon markets.
A senior government official disclosed that the current programs are quite limited due of a lack of buyers. However, the market will be extremely huge if the country launches a real carbon trading market with a conversion factor for every certificate into how much carbon dioxide has been saved. The real picture will be reflected in the market-determined pricing.
He added, “Setting up emission targets is not ruled out, but that will not happen soon. The market will let green plants and energy efficient units estimate earnings through carbon trade. This will help boost and finance more such projects.”
Considering large corporations’ net-zero commitments, the government intends to start with a voluntary market, according to the official. And a gradual transition to ‘cap and trade’ market, in which businesses are assigned pollution targets like in the EU emission trading system, is recommended.
Under India’s current Perform, Trade, and Achieve framework, Energy Saving Certificates (ESCerts), Renewable energy certificates (RECs) are traded to help companies achieve their renewable purchase obligations. Nonetheless, the trade of ESCerts has been halted due to low demand.
According to an analysis published by Deloitte Economics Institute, fully realizing India’s potential to export carbon credits to the world may net the country US$11 trillion over the next 50 years.