The Indian government has issued a list of projects that would be eligible to earn carbon offsets for the purpose of selling them in international carbon markets. According to a press release issued by the Ministry of Environment, Forests and Climate Change, a total of 13 activities have been identified as potential carbon offset generators in the country. The activities were announced by the National Designated Authority for the Implementation of the Paris Agreement (NDAIAPA).
Technologies that may be used to generate offsets eligible to be traded across jurisdictions include offshore wind power; green hydrogen; energy storage based on renewable energy; energy efficiency; sustainable aviation fuel; solar thermal energy; biogas; green ammonia; and carbon capture, utilisation and storage.
The NDAIAPA has approved these activities for a period of three years.
India recently approved a law to introduce a national carbon market. According to media reports, a voluntary carbon market could be launched later this year. It will gradually be expanded to cover all major energy- and emission-intensive industries and made mandatory.
India has not signed any agreements yet to link its planned national carbon market to other national or sub-national carbon markets, as allowed under Article 6 of the Paris Agreement.
Media reports quoting government officials stated that the Perform Achieve Trade (PAT) scheme would be transitioned into a carbon market. The PAT scheme was launched in July 2012 and works on a cap-and-trade framework but for energy efficiency. The government claims that PAT has overachieved its targets and reduced energy consumption by 5.3% compared to the target of 4.1% during its first operational phase between 2012 and 2015.
Existing and proposed schemes form part of India’s strategy to achieve its 2030 commitments. In 2015, India announced its Intended Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC). It committed to increase the share of non-fossil fuel based power generation capacity to 40% and reduce emissions intensity of GDP to 33–35% compared to 2005 levels.
India submitted an update to these commitments in August 2022, increasing the targeted share of non-fossil fuel power generation capacity to 50% and the target to reduce emissions intensity to 45% over 2005 levels.
Several countries have approved legislation to implement a domestic carbon market in line with Article 6 of the Paris agreement. Many of them have also signed bilateral agreements with countries rich in GHG emissions mitigation potential. Some have signed agreements with voluntary carbon market registries to enable domestic industries get access to carbon offsets. India is yet to do either of the two.
Some large Indian corporates have announced targets to reduce their carbon footprint and may have some experience with respect to participating in a carbon market. Companies already part of the PAT scheme would certainly be familiar with the general framework. Indian companies have substantial experience from the seller side, as it was once the second largest supplier of Certified Emission Reductions, or CERs, under the UNFCCC’s Clean Development Mechanism. That experience, alongside learnings from the PAT scheme, will make it easier for the Indian government and corporates to get ready for a national carbon market with international linkages.
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