India Gets Ready To Roll Out Its Domestic Carbon Credit Market Scheme

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Around a year after the Indian Parliament passed the Energy Conservation Bill 2022, the final draft of a scheme meant to govern the Indian domestic carbon credit market is close to completion. This legislation mandated the government to come out with rules to create a local carbon credit market. 

India to soon bring its Carbon Credit Market rules.

According to officials in the concerned ministries, the government is set to bring the final copy of the scheme soon. Akin to some of the established carbon credit markets in Western countries, the new scheme is likely to set benchmarks for industries to limit their emission of greenhouse gases. In case the emissions go beyond the prescribed limit, the industries would have to buy Carbon Credits from the sellers of the same from India. 

Several entities working towards pro-environment measures would become eligible for selling the same to these polluting entities. According to reports, the new scheme will likely include the segments of industries to be covered under the scheme for which threshold emissions would be fixed, making them binding to buy carbon credits in case of crossing emissions beyond the prescribed limits. The new scheme is likely to bind these industries to limit their emissions, buy these credits, or incentivize the pro-environment measures other entities take. 

Several states, meanwhile, are already working towards boosting the carbon credit sellers and expanding the chain. For example-the Uttar Pradesh government is working towards making the farmers of the state sellers of carbon credits. The government has planned to incentivize farmers to grow and maintain trees under the mechanism and earn carbon credits. However, the voluntary carbon credit market is not likely to be governed by this scheme. Minister for New and Renewable Energy, during his speech in Parliament during the discussion on the Energy Conservation Bill, had said that India would not allow the export of its carbon credit and would use it towards tackling its own climate goals. 

According to officials, the Bureau of Energy Efficiency (BEE) is set will work out to chalk out the final rules and procedures for the carbon credit market. The scheme is said to have proposed a constitution of the special inter-ministerial panel to look into the issue who would look into the regulation of the market. Last week Power Minister Alok Kumar claimed that the final framework of the Indian Carbon Credit Market would be released within two weeks. It is now said that the rules have been framed and will be put into the public domain very soon. 

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The industries, meanwhile, are waiting to understand some of the key issues related to the market, like the threshold limit of allowed emissions by industries, the entities to be covered, the institution which would be issuing the carbon credit, the whole mechanism of trading the carbon credit certificates, the rule on import and export of these certificates and others. 

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