Lok Sabha Question No. 2189 (UNSTARRED), answered on 2024-12-09
Subject: Indian Carbon Market
Ministry: ENVIRONMENT, FOREST AND CLIMATE CHANGE
Asked by: Shri Dushyant Singh

## GOVERNMENT OF INDIA MINISTRY OF ENVIRONMENT, FOREST AND CLIMATE CHANGE

## LOK SABHA UNSTARRED QUESTION NO. 2189

TO BE ANSWERED ON 09.12.2024

## Indian Carbon Market

## 2189.    SHRI DUSHYANT SINGH:

Will the Minister of ENVIRONMENT, FOREST AND CLIMATE CHANGE be pleased to state:

- (a) the details of the Indian Carbon Market (ICM) in helping to achieve the climate goals of the country, particularly the Nationally Determined Contribution (NDC) target of reducing the emissions intensity of GDP by 45% by 2030 compared to 2005 levels;
- (b) the mechanism adopted by the ICM to decarbonise the Indian economy through carbon credit trading;
- (c) the details of the ICM build on existing market mechanisms, such as the energy savings-based  market  to  expand  its  scope  to  cover  additional  energy  sectors  in India; and
- (d) the details of the steps taken by the Government to develop a robust Monitoring, Reporting, and Verification (MRV) process under the ICM and the manner in which consultation on Accredited Carbon Verifiers (ACVs) contribute to the Scheme's successful implementation?

## ANSWER

MINISTER  OF  STATE  IN  THE  MINISTRY  OF  ENVIRONMENT,  FOREST  AND CLIMATE CHANGE (SHRI KIRTI VARDHAN SINGH)

- (a) As  per  the  Third  National  Communication  (TNC)  submitted  to  the  United  Nations Framework  Convention  for  Climate  Change  (UNFCCC)  in  December  2023,  India  has successfully continued to decouple its economic growth from Greenhouse Gas emissions, resulting in the reduction of the emission intensity of its Gross Domestic Product (GDP). The details are given below:

| Period    |   GHGInventory year | Reduction in Emission Intensity w.r.t. 2005 levels   |
|-----------|---------------------|------------------------------------------------------|
| 2005-2010 |                2010 | 12%                                                  |
| 2005-2014 |                2014 | 21%                                                  |
| 2005-2016 |                2016 | 24%                                                  |
| 2005-2019 |                2019 | 33%                                                  |

To develop the carbon market, the necessary amendments were proposed in the Energy Conservation Act, 2001 (52 of 2001) in the year 2022. Thus, the regulatory framework for the Indian Carbon Market is established under the Energy Conservation Amendment Act, 2022, where clause (w) of section 14 of the EC Act empowers the Central Government, in consultation with the Bureau of Energy Efficiency (Bureau) to specify the carbon credit trading  scheme.  Based  on  the  above,  the  Central  Government  has  notified  the  Carbon Credit  Trading  Scheme  vide  notification  S.O.  2825(E),  dated  28th  June  2023  and amendment  notification  S.O.  5369(E),  dated  19th  December  2023.  The  Carbon  Credit Trading Scheme (CCTS) is expected to contribute to achieving India's climate goals in line with the commitments under UNFCCC and its Paris Agreement.

(b) To facilitate the achievement of India's enhanced Nationally Determined Contributions (NDCs) targets, the Government of India intended to develop a robust framework for the Indian Carbon Market (ICM) with the objective of decarbonizing the Indian economy by pricing  the  Green  House  Gas  (GHG)  emission  through  trading  of  the  carbon  credit certificates.

CCTS defines the two mechanisms namely, compliance mechanism and offset mechanism. In the compliance mechanism, the obligated entities shall comply with the prescribed GHG emission  intensity  reduction  norms  in  each  compliance  cycle  of  CCTS.  The  obligated entities which reduce their GHG emission intensity below the prescribed GHG emission intensity  shall  be  eligible  for  issuance  of  Carbon  Credit  Certificates.  ln  the  offset mechanism,  the  non-obligated  entities  can  register  their  projects  for  GHG  emission reduction or removal or avoidance for issuance of Carbon Credit Certificates. The Carbon Credit Trading Scheme is expected to contribute to achieving India's climate goals in line with the commitments under UNFCCC and its Paris Agreement.

(c) The Perform Achieve and Trade (PAT) Scheme was initiated in the year 2012 and is a market-based mechanism  aimed  to  improve  energy  efficiency in energy-intensive industries by notifying specific energy consumption reduction targets to industries (called Designated  Consumers  or  DCs).  The  Government  of  India  has  developed  a  detailed transition plan to smoothly shift energy-intensive sectors and designated consumers (DCs) from the Perform, Achieve, and Trade (PAT) scheme to the compliance mechanism under Carbon Credit Trading  Scheme  (CCTS). This plan ensures continuity, consistency,  and alignment with national climate goals while avoiding duplication of targets. To initiate the transition, the Government has identified nine energy-intensive sectors for inclusion under the CCTS, namely, Aluminium, Cement, Steel, Paper, Chlor-Alkali, Fertiliser, Refinery, Petrochemical, and Textile.

(d) Under the Carbon Credit Trading Scheme (CCTS), Bureau of Energy Efficiency has developed Detailed Procedure for Compliance Mechanism which covers comprehensive Measurement, Reporting, and  Verification  (MRV)  framework to ensure accurate, transparent, and credible compliance. The key elements of the MRV framework include target setting,  Monitoring, Reporting  & Verification procedure along with issuance and Trading  of  Carbon  Certificates.  The  development  process  of  the  MRV  guidelines  has followed  a  consultative  approach  which  includes  Stakeholder  Consultations, Draft Circulation to the concerned stakeholders based on which the document was finalized. The finalized MRV framework was published by the Government of India in July 2024. An essential aspect of the MRV framework is the verification process, which requires annual verification of GHG emissions data. To ensure credibility of the CCTS scheme, BEE will accredit Carbon Verification Agencies based on specific eligibility criteria. The detailed procedures containing the Accreditation Eligibility Criteria and Procedure for Accredited Carbon Verification Agency  has  been  developed  by  Bureau  of  Energy  Efficiency  after extensive stakeholder consultation and published in July 2024.

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