OIES Podcast – Building the Indian Carbon Market

OIES Podcast – Building the Indian Carbon Market

David Ledesma talks with Mohua Mukherjee about what to expect from the Indian Carbon Market, which is currently in the works and will be launched later in 2023. India, like the other signatories to the Paris Agreement, will establish emission trading rules following Article 6 of the Agreement.

India was the second largest issuer of Certified Emission Reductions (CERs) under the predecessor to today’s carbon market, the Clean Development Mechanism.

As a result, the country already has considerable experience in the carbon offset market, also known as the voluntary market.

India has two decades of compliance experience, as it has been running a domestic energy efficiency scheme in which large, energy-intensive industrial sectors are required to participate and meet year-on-year targets to reduce their energy intensity.

Companies that exceed their targets are awarded energy savings certificates.

Underachievers must pay a penalty or purchase certificates from the overachievers. For the past decade, a separate compliance market has been operating in the renewable energy sector, issuing renewable energy certificates to assist certain companies in meeting their renewable purchase obligations.

There will be a two-year transition period during which the current certificates (expressed in tonnes of oil equivalent and megawatt-hours, respectively) will be converted and issued in tonnes of CO2 equivalent only in the future.

The future carbon market in India will essentially absorb and combine the two existing compliance markets as well as the voluntary offset market. Accredited verifiers are being trained, and monitoring, reporting, and verification (MRV) methodologies are being developed.

Early indications of how the Indian Carbon Market will function indicate that India prioritizes meeting its ambitious NDC targets before allowing international trading in carbon credit certificates generated in India.

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