The Union government plans to develop the Indian carbon market with a national framework to decarbonize the country’s economy through the trading of carbon credit certificates.

The Bureau of Energy Efficiency (BEE), Ministry of Power, and Ministry of Environment, Forest, & Climate Change are jointly developing a Carbon Credit Trading program.

The Carbon market is expected to accelerate the country’s efforts to achieve the Nationally Determined Contributions of reducing emissions intensity by 45% by 2030 against the 2005 levels.

A A competitive carbon market mechanism will be designed to enable the reduction of greenhouse gas emissions at the least cost, both at the level of an entity and the overall sector.

The market will help develop methods for estimating emission reductions and removals from various registered projects.

It will also help stipulate the required validation, registration, verification, and issuance procedures needed to operationalize the scheme.

The government is discussing the creation of monitoring, reporting, and verification (MRV) guidelines for the trading program to drive faster adoption of clean technologies.

Director General of the Bureau of Energy Efficiency Abhay Bakre said, “The Indian Carbon Market can be a vehicle for mobilizing a significant portion of investments required by the Indian economy to transition toward low-carbon pathways. This consultation will give specific guidance for developing the MRV process and define eligibility criteria for Accredited Carbon Verifiers.”

Also, a comprehensive institutional and governance structure will be set up with specific roles of each party involved in the execution of the carbon market. Capacity building of all entities will be undertaken for up-skilling in the subject matter.

The government is planning to seek validation of its proposed carbon certificates from the European Union, which will enforce a carbon tariff on imports and the exemption for some micro, medium, and small enterprises.

A recent report by the Department of Economic and Policy Research affirmed that India must establish a comprehensive carbon pricing mechanism aligning with current international standards and implement a carbon tax to accelerate the growth of green finance to achieve the climate objectives.