The Centre will conduct key stakeholders’ consultations before finalising the parameters of the Indian Carbon Market, which will enable corporate India to buy and sell carbon credits on a trading platform, a senior government official told FE.
The Bureau of Energy Efficiency (BEE), under the Ministry of Power, is the nodal agency for the scheme.
“The scheme for a carbon credit market, in essence, takes off based on our experience with the ‘Renewable Energy Certificate’ (REC) and ‘Energy Savings’ certificate programme,” Abhay Bakre, Director General of the Bureau of Energy Efficiency told FE.
At presnet, a REC is a market-based instrument that certifies one megawatt-hour (MWh) of electricity generated from a renewable energy resource.
According to Bakre, in the carbon market, rather than an energy certificate, a carbon credit will be issued to a set of industries, which will shift from fossil fuel to non-fossil energy usage.
Currently, there are 13 industries, including aluminum, cement, fertilisers, iron and steel, pulp and paper, textiles, petroleum refineries, among others, who are given targets to reduce their energy intensities.
“We will start the scheme with a limited set of industries that have been designated as energy- or emission-intensive. This set will now be given the targets for emission reductions and provision of buying carbon credits to meet their emission obligations,” Bakre said.
“The scheme is in the draft stage as of now, and its parameters are being finalised in consultations with the industry and experts. We expect to start the scheme in next two years.”
Besides, it is expected that the price discovery of carbon credit will take about three to five years.
“The system needs to be mature and become stable. It would require more industries to be added to it at a later stage. The CERC will run the trading platform on which these credits will be traded.”
The system, Bakre said, will include verifications by carbon auditors, and only after due diligence will the credits be made available to the industry.
The scheme for the carbon credit market is also expected to provide relief to the industry, which is increasingly under international obligations to offset emissions to ensure smooth pathways for exports.