India plans own uniform carbon trading market
Recently, the Indian government is planning a “uniform carbon trading market”, according to the information received, the central government is considering the implementation of a carbon trading scheme.
- The scheme will cover all existing tradable certificates (related to carbon trading).
- India is the largest exporter of carbon credits. Such a plan could provide a better opportunity for financing energy transition projects and emissions reductions.
- Carbon trading is a market-based system of buying and selling permits and credits. This permit allows the holder to emit carbon dioxide.
- The system sets the maximum permissible amount/limit of emissions from important sources of carbon, including the power industry, motor vehicles and air travel.
- Governments issue permits to the extent permitted. If a company curbs carbon emissions at its own level, it can get cash by trading surplus permits on the carbon market.
- If that company is not able to limit its emissions, it may have to purchase additional permits.
- It is a mechanism for the implementation of the Kyoto Protocol to reduce greenhouse gas (GHG) emissions.
- Article 6 of the Paris Climate Change Agreement also describes provisions relating to the establishment of a new carbon market.
Benefits of carbon trading
- It helps in reducing greenhouse gas emissions.
- It is much easier to implement than to implement costly direct regulations.
Some existing systems –
- Perform, Achieve and Trade (PAT): It is a market-based mechanism. It emphasizes on increasing energy efficiency to reduce energy consumption in high energy consuming industries.
- Renewable Energy Certificate (REC): This is another market based mechanism. It corrects the imbalance in the availability of renewable energy resources in the state and the requirement of the entities obliged to meet the Renewable Purchase Obligation (RPO).
Source – The Hindu
