Shift in India’s Climate Policy

Source: The post shift in India’s climate policy has been created, based on the article “Establishing a carbon market” published in “The Hindu” on 29th August 2024

UPSC Syllabus Topic: GS Paper3- Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

Context: The article discusses India’s transition from energy efficiency targets in polluting industries like iron and steel to emission targets. It explains the shift from the PAT scheme to a carbon market approach, aligning climate change efforts with socioeconomic priorities.

For detailed information on Climate Negotiations and India read this article here

What is the Shift in India’s Climate Policy?

1. The finance minister announced that industries with high pollution levels, such as iron, steel, and aluminium, will need to meet specific emission targets instead of just focusing on energy efficiency.
2. This means that instead of just using energy more efficiently, these industries must limit their overall pollution.
3. India aims to tackle climate change while also meeting its development needs, such as industrial growth and housing.
4. The move towards a carbon market approach is seen as a step to better manage and reduce overall emissions, especially from industries that contribute significantly to pollution.

How Do PAT and Emissions Trading Work?

1. Perform, Achieve, and Trade (PAT): PAT is a regulatory tool aimed at reducing specific energy consumption in energy-intensive industries. It focuses on enhancing cost-effectiveness through energy efficiency. Industries that surpass their energy-saving targets generate certificates which they can trade.
2. Emissions Trading (Cap and Trade): This system assigns absolute emission caps to polluters, encouraging them to stay within these limits. Unlike PAT, it deals with total emissions rather than energy efficiency. Companies must reduce their emissions to meet these caps or buy allowances from those who have excess credits, thus incentivizing reductions in overall emissions.

What Does the Carbon Market Mode Entail?

1. Phased Implementation: The carbon market in India will begin with a voluntary phase, supported by a domestic project-based offset scheme. Later, it will evolve into a compliance market with mandatory participation for regulated entities.
2. Sector Inclusion: From 2026, the carbon credits trading scheme will include high-polluting sectors like iron, steel, petrochemicals, chemicals, and aluminum.
3. NDC Alignment: This market aligns with India’s Nationally Determined Contributions, aiming to reduce GDP emissions intensity by 45% and achieve 50% power capacity from non-fossil fuels by 2030.

How Does This Align With Global Efforts?

1. While India has not committed to specific emission cuts like those outlined in the European Union Emissions Trading System, it is working within its own development framework to find suitable ways to reduce emissions.
2. By transitioning to a carbon market, India adheres to its Nationally Determined Contributions under the 2015 Paris Agreement.
3. The approach balances India’s development priorities with environmental sustainability, recognizing the unique challenges and needs of a developing economy.

Question for practice:

Evaluate how the shift from energy efficiency targets to emission targets in high-polluting industries aligns with India’s climate change and development goals.