A carbon market in India was introduced through Energy Conservation (Amendment) Bill, 2022 to follow United Nations Climate Change Conference (COP26) as an attempt reduce fossil fuel consumption through use of non-fossil sources such as green hydrogen, green ammonia, biomass, and bioethanol as energy and feedstock.
The Indian National Carbon Trading Scheme is a carbon emission trading scheme being developed by the Bureau of Energy Efficiency in India, which may start as a voluntary market in 2023. It is expected to start trading existing Renewable Energy Certificates (REC) and Energy Savings Certificates (ESC) by 2025 and for these to become Carbon Credit Certificates by 2026. It was legislated in 2022. It has been suggested that mandatory carbon allowances could be included in future so that it would become a carbon market similar to the Chinese and EU ETS. The director of the bureau says that it will become the world's largest carbon market by 2030.
The government of India established a carbon market in India, improved the Code for Energy Conservation Building and helped to build the governing council of the Bureau of Energy Efficiency through increasing members. The bill aimed to make the use of non fossil fuel sources mandatory for energy and encourage feedstocks like green ammonia, green hydrogen, ethanol and biomass.
The carbon market in India seeks the following benefits:
The carbon market in India includes multiple features:
The mechanism of the carbon market in India can face challenges of corruption and environmental concerns. Implementation may take time and should be done in a phased manner.
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