Government Seeks Comments on Draft Carbon Credit Trading Scheme

The Ministry in the project has proposed the establishment of an Indian Carbon Market Governing Council with the Secretary of the Ministry of Environment, Forests and Climate Change as its chairman to directly oversee its administrative and regulatory functioning of the market.

“The governance of the Indian Carbon Market (ICM) and direct oversight of its administrative and regulatory functioning is entrusted to a Board of Governors, referred to as the ICMGB,” the draft states.

The Board will be empowered to meet at least quarterly, recommend procedures for the institutionalization of the Indian carbon market, recommend rules and regulations to the central government for market functions, recommend methods to be used under the voluntary mechanism, guidelines regarding the sale of carbon credit certificates for outside of India.

It would also recommend a Center or designated agency for issuing a Carbon Credit Certificate (CCC), among other functions. The Bureau for Energy Efficiency (BEE) will be the administrator of the carbon market and will also act as the secretariat of the ICMGB.

As administrator, BEE will develop standards and processes for registering projects under the voluntary facility, issue a carbon credit certificate in line with ICMGB recommendations, and develop a market stability mechanism for carbon credits. The Bureau will also develop and maintain the IT infrastructure, including the knowledge platform required for the carbon market, as well as maintain a secure database with all security protocols.

The regulator of carbon trading activities will be the Central Electricity Regulatory Commission (CERC), where it will regulate issues related to trading in carbon credit certificates, including the frequency of trading, take corrective measures to prevent fraud, and protect the interests of both sellers and buyers, the offer says.

CERC will also establish technical committees for various areas as required by either compliance mechanisms or voluntary mechanisms. Energy exchanges will need to be approved by the commission in order to enter the market space for trading carbon credits.

The draft notes that under the compliance mechanism, obligated entities, including designated customers subject to the compliance mechanism notified periodically by the Center, must register to participate in the Carbon Credit Trading Scheme.

For the Voluntary Trading Facility, BEE will develop methodologies and a detailed procedure for project registration and issuance of carbon credit certificates for various sectors as needed, the project says.

The project comes after Parliament approved the Energy Conservation (Amendment) Bill 2022 last December, which aims to enact provisions to make the use of clean energy mandatory. The bill paved the way for the creation of a carbon market in India.

In an interview with Mint in January, BEE CEO Abhay Bakr said that India’s carbon trading system is being rolled out and it could be released this year, with the voluntary carbon trading market also opening during the year.

“We expect the structure to be rolled out and the voluntary market to emerge during this 2023. The compliance market will take time because goals and deadlines must be set for industries. It will take about 2-3 years,” he said, adding that the current Fulfillment, Achievement and Trade (PAT) scheme will be translated into the Compliance Market,” he said.

Electricity exchanges are also preparing to offer carbon credit trading platforms. In December, the Indian Energy Exchange announced the establishment of a subsidiary, International Carbon Exchange Pvt. Ltd to explore business opportunities in the voluntary carbon market.

The carbon market will help, experts say, as many leading Indian corporations have committed to becoming carbon neutral, and the market will provide flexibility for businesses in sectors where emissions are difficult to cut and with high abatement costs to complement their own emission reduction efforts. loans. , from the carbon market. The market is expected to incentivize low cost organizations to cut emissions beyond their mandate, and trading in the carbon market could reduce the overall cost of cutting emissions in India.