The Indian Carbon Market : Pathway Towards an Effective Mechanism

August 13, 2024

India has pledged to meet its Nationally Determined Contribution (NDC) targets by 2030. Additionally, it aims to attain net-zero emissions by 2070, following the guidelines set forth by the United Nations Framework Convention on Climate Change (UNFCCC). In order to achieve these goals, India is actively exploring decarbonization strategies and employing emission reduction tools and mechanisms for greenhouse gas (GHG) emitting sectors in the country.

Carbon markets represent one such tool or mechanism implemented globally, as well as at national and sub-national levels by numerous countries. India, too, is in the process of developing and launching its own national compliance-based carbon market as proposed under the Energy Conservation (amendment) act of 2022.

This report aims to collate a clear set of learnings from the past and ongoing compliance-based emission trading schemes (ETS) worldwide, including those operating in India. The report includes case studies of  European Union ETS and Asian markets like South Korean ETS and China ETS. It also analyzes the Surat ETS for PM emissions and India’s national Perform Achieve & Trade (PAT) scheme. The report highlights the lessons from the PAT scheme that needs to be carefully taken into account as the forthcoming Carbon Credit and Trading Scheme (CCTS) is set to transition from the PAT scheme. Based on the analysis, the report has come up with a set of challenges that the scheme might face and recommendations for the upcoming Indian Carbon Market. The aim is to facilitate the effective operationalization of carbon markets in India and ensure they serve their intended purpose of reducing emissions.