| Introduction: Define carbon markets and carbon credits. Body: Impact of global carbon impact on India and how can level playing field be achieved Conclusion: Conclude on India can take leadership role. |
Carbon markets are essentially a tool for putting a price on carbon emissions. They establish trading systems where carbon credits or allowances can be bought and sold. Carbon credits and carbon market was first set out in Article 17 of the Kyoto Protocol which allows countries that have emission units to spare can sell this excess capacity to countries that are over their targets of curbing GHG emissions.
What is the impact of global carbon impact on India’s domestic market?
- Technology Transfer: Indian carbon market can gain access to the latest technology to reduce emissions, and mitigate climate change.
- Fulfilment of International Goals: The positive impact can lead to a commitment to the NDC goals of India announced in the Paris Agreement. This would help India achieve carbon neutrality by 2070.
- Address the imbalance between developed and developing nations: Global carbon market is expected to cross $100 billion by 2030 which could impact India’s carbon market in terms of increased completion and pricing mechanism. A rules-based system of the global carbon market according to the Paris Agreement would offset the advantage held by developed nations over developing nations due to their technical and financial capabilities.
How can a level playing field be achieved?
- Cooperation in the International Market: Indian companies and organizations can participate in the global marketplace to trade carbon credits. This could lead to the expansion of the market and new opportunities for buyers and sellers.
- Access to international funding: More interlinkages can lead to more funding from international organizations and investment. Proceeds from such investment can be used to mitigate climate change and sustainable development. A long-term commitment of developed nations to developing countries of $100 billion annually can be fulfilled.
- Carbon credit market: Ministry of New and renewable energy has announced to establish carbon credit market in India. Carbon credits so generated would be used to achieve Nationally Determined Contributions (NDC) commitments with excess generated to be sold in the global market. The revenue generated would be used for the development of renewable energy infrastructure, afforestation, and reforestation projects.
- Oversight by a neutral body: Global carbon market would have an oversight mechanism headed by the UN entity which will be a centralized and regulatory body responsible for the efficient trading of carbon credits.
Conclusion:
India as chair of G20 in 2023 needs to take a leadership role in climate change and climate finance. India could position itself as a key leader in the global carbon market by focusing on the 5E’s- enhancing carbon reduction efforts, establishing robust mechanisms, exploring technology and innovation, and empowering local stakeholders in pursuing goals of sustainable development.
