Ministry of Power & Ministry of Environment, Forests & Climate Change to develop Carbon Credit Trading Scheme for Decarbonisation

Source: The post is based on the article “Ministry of Power & Ministry of Environment, Forests & Climate Change to develop Carbon Credit Trading Scheme for Decarbonisation” published in PIB on 12th May 202

What is the News?

The Government of India is planning to develop a Carbon Credit Trading Scheme for Decarbonisation.

What are Carbon Markets?

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

There are broadly two types of carbon markets: compliance and voluntary.

Compliance markets: They are created as a result of any national, regional and/or international policy or regulatory requirement.

Voluntary carbon markets: It refers to the issuance, buying and selling of carbon credits, on a voluntary basis.

What is the Carbon Credit Trading Scheme?

Being developed by: Bureau of Energy Efficiency, Ministry of Power along with the Ministry of Environment, Forest & Climate Change.

Aim: To develop the Indian Carbon Market (ICM) with the objective to decarbonise the Indian economy by pricing the GreenHouse Gas (GHG) emissions through the trading of Carbon Credit Certificates.

Features: The ICM will develop methodologies for the estimation of carbon emissions reductions and removals from various registered projects, and stipulate the required validation, registration, verification, and issuance processes to operationalize the scheme.

– Monitoring, Reporting, and Verification (MRV) guidelines for the emissions scheme will also be developed after consultation. 

– A comprehensive institutional and governance structure will be set up with specific roles of each party involved in the execution of ICM.

Significance: By accelerating the transition to a low carbon economy, the ICM will facilitate the Nationally Determined Contributions (NDC) goal of reducing the Emissions Intensity of the GDP by 45 percent by 2030 against 2005 levels.