Carbon Credit Trading ECO system in India Way forward

The establishment of the National Steering Committee for the Indian carbon market marks a significant stride towards mitigating climate change and fostering sustainable development. This committee, entrusted with the governance and oversight of the Indian carbon market, comprises distinguished members from relevant government ministries, experts in emissions, carbon trading, climate change, and energy. Let’s delve into the intricacies of this committee and explore its crucial functions.

1. Composition of the National Steering Committee:

• Led by the Secretary of the Ministry of Power as the Chairperson, and co-chaired by the Secretary of the Ministry of Environment, Forest and Climate Change, the committee boasts a multidisciplinary and experienced lineup.
• It includes representatives from various ministries, such as Finance, Niti Aayog, Power, Environment, Forest and Climate Change, New and Renewable Energy, Steel, Coal, Chemicals and Fertilizers, Petroleum and Natural Gas, and Agriculture and Farmers Welfare.
• Additionally, Principal Secretaries from the Department of Environment of respective State Governments, nominated by the Central Government, serve as ex-officio members.
• Expert members co-opted by the committee bring specialized knowledge in emissions, carbon trading, climate change, environment, and energy.

2. Key Functions of the National Steering Committee:

• Formulating Procedures: The committee recommends the formulation and finalization of procedures to institutionalize the Indian carbon market, ensuring transparency and effectiveness.
• Developing Rules and Regulations: It plays a pivotal role in shaping the rules and regulations that govern the functions of the Indian carbon market, promoting fair and efficient trading practices.
• Setting Greenhouse Gas Emission Targets: The committee recommends specific greenhouse gas emission targets for obligated entities, encouraging ambitious reductions in emissions.
• Facilitating Carbon Credit Trading: Recommendations are made for guidelines regarding the trading of carbon credit certificates outside India, promoting the exchange of credits and encouraging international cooperation.
• Monitoring Market Functions: The committee ensures diligent monitoring of the Indian carbon market, ensuring compliance with established regulations and driving its smooth operation.
• Establishing Committees and Working Groups: As required, the committee recommends the constitution of additional committees or working groups, fostering collaboration and expertise in relevant areas.

3. The Bureau: Administrator of the Indian Carbon Market:

• The Bureau, entrusted with administering the Indian carbon market, plays a crucial role in its operationalization and development.
• Sector Identification and Targets: It identifies sectors with potential for greenhouse gas emission reduction and recommends their inclusion in the Indian carbon market, shaping a comprehensive and impactful approach.
• Carbon Credit Certificate Issuance: Based on the recommendations of the National Steering Committee, the Bureau issues carbon credit certificates, acknowledging and rewarding entities that exceed their emission reduction targets.
• Market Stability and Verification: The Bureau develops market stability mechanisms for carbon credits and formulates procedures for accrediting carbon verification agencies, ensuring the integrity and credibility of the market.
• Capacity Building and IT Infrastructure: It conducts capacity building activities for stakeholders and develops and maintains the necessary information technology infrastructure, facilitating efficient market operation.

4. The Registry: Safeguarding Transactions and Records:

• The Grid Controller of India Limited acts as the registry for the Indian carbon market, safeguarding transaction records and ensuring secure data storage.
• Registration and Database Management: The registry undertakes the registration of obligated and non-obligated entities, maintaining a secure database with robust security protocols.
• Collaboration and Meta-Registry Role: It establishes linkages with national and international registries and power exchanges, promoting collaboration and enhancing market transparency.
• Sharing Transaction Records: The registry shares transaction records with power exchanges and the Bureau, fostering transparency and accountability in the trading process.

5. The Central Electricity Regulatory Commission: Ensuring Fair Trading Practices:

• As the regulator for trading activities in the Indian Carbon Market, the Central Electricity Regulatory Commission safeguards the interests of buyers and sellers, promoting fair and ethical trading practices.
• Market Oversight and Fraud Prevention: The commission exercises market oversight, taking necessary preventive and corrective actions to prevent fraud or mistrust, ensuring the market’s integrity and credibility.

6. Compliance Mechanism and Obligated Entities:

• Compliance Requirements: The Ministry of Power, in consultation with the Bureau and the National Steering Committee, identifies the sectors and obligated entities that must record and maintain greenhouse gas emissions intensity data.
• GHG Emission Intensity Targets: Based on recommendations from the Bureau and the National Steering Committee, the Ministry of Power recommends greenhouse gas emission intensity targets to the Ministry of Environment, Forest and Climate Change for notification under the Environment Protection Act, 1986.
• Achieving Targets and Carbon Credit Certificates: Obligated entities are required to achieve the notified greenhouse gas emission intensity targets. Entities that exceed their targets are issued carbon credit certificates as recognition of their efforts. Entities that fail to achieve the targets can meet the shortfall by purchasing carbon credit certificates from the Indian carbon market. Each carbon credit certificate represents one tonne of carbon dioxide equivalent (CO2e).
• Additional Targets: Obligated entities are also required to fulfill any other targets, such as non-fossil-based energy use or specific energy consumption reduction, as notified by the Ministry of Power under the Energy Conservation Act, 2001.
• Monitoring and Reporting: Obligated entities must record and report their greenhouse gas emissions data, ensuring transparency and accountability in their emission reduction efforts.
• Verification: The accredited carbon verification agencies, as determined by the Bureau, play a crucial role in independently verifying the emission reduction achieved by obligated entities.
• Non-Compliance Measures: In cases where obligated entities fail to meet the specified targets or fail to comply with reporting requirements, appropriate measures may be taken, including penalties or corrective actions, to ensure compliance with the regulations and encourage emission reduction efforts.

Conclusion: The compliance mechanism forms an integral part of the Indian carbon market, ensuring that obligated entities fulfill their emission reduction targets and contribute to sustainable development. Through monitoring, reporting, verification, and non-compliance measures, the compliance mechanism promotes transparency, accountability, and effectiveness in achieving emission reduction goals. By adhering to the compliance requirements, obligated entities can play an active role in mitigating climate change and driving India towards a greener and more sustainable future.