Power Ministry notifies carbon credit trading scheme

Emphasising that carbon market is the key to build acceleration towards green energy, Power Secretary Alok Kumar on Friday said the mechanism is imperative as the share of non-fossil fuels is set to rise in India’s energy mix by the end of this decade.

The Power Ministry on Friday notified the domestic carbon market framework aimed to encourage increased mitigation actions by both public and private sector entities for the achievement of India’s updated Nationally Determined Contribution (NDC) targets.

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After extensive consultations with stakeholders in March 2023, the Ministry of Power has finalised and released the notification on the Carbon Credit Trading Scheme (CCTS), said the Power Secretary, who retires today, in an exclusive interaction with businessline.

Kumar stressed that carbon markets will further deepen the power sector and help drive momentum towards meeting the target of 500 GW of non-fossil fuel capacity by 2030.

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“When you are greening electricity, the sector will have a larger contribution in our energy supply because the share of electricity in energy consumption will go up and that would need a larger system, but in the same process it will also facilitate deeper penetration of renewable energy. Today non-fossil has 24 per cent share, this is going to increase to about 45 per cent in 2030 so the carbon markets would drive the power sector to have a larger role in power supply and for a green power supply,” he noted.

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Carbon Market Association of India (CMAI) President Manish Dabkara said that taking a cue from its Paris Agreement commitment and chasing its NetZero goal, the government has released the CCTS for institutionalisation and functioning of Indian Carbon Market (ICM).

It involves a process for compliance in which emission objectives will be established for specific industries and organisations, surpassing which they will receive credit certificates.

Carbon Markets

The notification mandates the creation of the National Steering Committee for Indian Carbon Market (NSCICM), which will be responsible for overseeing the scheme.

“It will comprise nine Ministries, two State departments, and two subject matter experts, the NSCICM will play a crucial role in establishing rules, regulations, and procedures for the institutionalisation of the Indian carbon market.

Primarily, it shall make recommendations on a wide range of issues regarding the functioning of the carbon market to the Bureau of Energy Efficiency (BEE), which will be heading the administration of the carbon market.

BEE will develop the trajectory and targets under the compliance mechanism, issue carbon credits, and establish market stability mechanisms, among other functions. It will be responsible to develop data submission formats and maintain the IT infrastructure for the market. And most importantly, it will ensure the security of the database while following all security protocols.

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