India's Carbon Market: A Roadmap for Net Zero

India is on a path to establishing a national compliance-based carbon market, aiming to achieve its ambitious climate goals. The Centre for Science and Environment (CSE) has released a detailed report outlining a roadmap for the Indian Carbon Market (ICM), which aims to facilitate a transition from the existing Perform, Achieve and Trade (PAT) scheme to a more comprehensive and effective mechanism.

• The ICM will cover hard-to-abate sectors, focusing on reducing carbon emissions and contributing to India's commitment to net-zero emissions by 2070.
• The CSE report emphasizes the importance of a robust carbon pricing mechanism to incentivize emission reduction. It proposes a single nationwide carbon market scheme for carbon-intensive sectors.

CSE's Recommendations for India's Carbon Market

The CSE report analyzes existing Emission Trading Schemes (ETS) around the world, including the European Union, Korea, China, and Surat, providing insights for the development of the Indian carbon market.

• The CSE emphasizes the need for a high carbon price to drive significant emissions reduction in India.
• It advocates for data integrity, transparency, and effective implementation to ensure the ICM's success.
• The report proposes a single nationwide scheme to avoid complexity and ensure streamlined implementation.

Challenges and Considerations for India's Carbon Market

The CSE acknowledges the challenges faced by global carbon markets, including low carbon prices and market liquidity. The report highlights the shortcomings of India's PAT scheme, which has faced criticism for its lack of ambition and overachievement of targets.

• The CSE cautions against simultaneous implementation of the PAT and ICM schemes, which could lead to confusion within the sector.
• It recommends phasing out the PAT scheme and transitioning to a single, comprehensive carbon market mechanism.

Key Elements for a Successful Indian Carbon Market

The CSE report emphasizes the importance of key elements for a successful Indian carbon market, focusing on ambition, market stability, and effective penalties.

• The report recommends setting ambitious targets for carbon emissions reduction.
• It stresses the need to establish market stability mechanisms to address price fluctuations and liquidity concerns.
• A high floor price for carbon emissions is proposed to incentivize emission reductions and generate sufficient revenue.
• The CSE emphasizes the importance of implementing sizable penalties for non-compliance, ensuring effective enforcement of the carbon market regulations.
• Voluntary credits should be limited to less than five percent and should be of high integrity.

India's Journey Towards a Sustainable Future

The development of India's carbon market is crucial for the country's commitment to achieving net-zero emissions and mitigating climate change. The CSE's roadmap provides valuable guidance and recommendations for ensuring an effective, ambitious, and sustainable carbon market in India.

• The ICM is expected to drive innovation and investment in clean technologies, fostering a transition to a low-carbon economy.
• It will play a key role in enhancing India's position as a leader in climate action and contributing to global efforts to combat climate change.

Conclusion: Importance of the Indian Carbon Market

India's transition to a national carbon market represents a significant step towards achieving its climate goals. By implementing a robust and well-designed carbon market, India can effectively manage its carbon emissions, incentivize clean energy solutions, and contribute to a sustainable future.

• The CSE's roadmap provides a valuable framework for navigating the complexities of carbon market development in India.
• The success of the Indian carbon market depends on a collaborative approach, involving government agencies, businesses, civil society organizations, and stakeholders.