As part of its efforts to accelerate the transition to cleaner fuels, India plans to launch a carbon trading market for major emitters in the energy, steel, and cement industries.
According to people familiar with the plan, Prime Minister Narendra Modi is expected to announce the platform during the Independence Day celebrations on August 15. It has been in the works since March, when consultations with ministries and companies began, according to people who did not want to be identified because the discussions are private.
The Prime Minister’s Office and the government think tank NITI Aayog did not immediately respond to requests for comment.
According to the people, the market would initially be limited to hard-to-abate sectors, allowing participants to trade credits earned from reducing emissions. One of the goals is to ensure that state-owned energy companies such as Oil & Natural Gas Corp., Indian Oil Corp., and NTPC Ltd., as well as steel and cement companies, can benefit from planned investments in carbon-capture projects, they said.
Plan to achieve net zero emissions by 2070
At the COP26 summit in Glasgow late 2021, India, the world’s third-largest emitter, surprised observers by announcing a plan to achieve net zero emissions by 2070. While this is a decade behind China, the South Asian economy is less developed and faces greater climate challenges. As a first step toward its goal, the country intends to reduce 1 billion tonnes of emissions by 2030.
India’s proposed market is similar to one in China, which launched a mandatory trading system for all large power plants 2021. However, the market has been plagued by data collection delays and problems, resulting in only mediocre buying and selling of allowances.
According to the sources, a detailed plan for establishing the carbon market will be ready in the fourth quarter. As part of its climate goals, India plans to introduce methanol-blended fuels in land and marine transportation, build more carbon capture projects, and encourage the adoption of electric vehicles.
The local Mint newspaper had previously reported on the carbon-market plan.
