India Revises Its Carbon Credit Trading Scheme for Voluntary Players

India’s 2024 Carbon Credit Trading Scheme (CCTS) is a ground-breaking move towards environmental protection. With the updated plan, everyone is encouraged to reduce emissions and adopt sustainable practices through allowing individual innovators as well as companies to participate in the carbon credits market.

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Anyone can participate under the new regulations by registering environmental projects, such as planting trees or installing renewable energy sources. Carbon credit certificates (CCCs), which quantify the quantity of CO2 avoided or removed from the atmosphere, are awarded to these projects. By allowing the market to trade CCCs, which each represent one metric tonne of CO2, a mechanism for pricing emissions and encouraging investment in green technologies has been created.

With its creative strategy, India hopes to lower greenhouse gas emissions and establish an effective voluntary carbon market. Everyone is now able to contribute to a sustainable future thanks to this. The updated CCTS wants to strengthen India’s position in international climate efforts by using innovative financing techniques and guaranteeing transparency in carbon tracking, thus serving as a model for inclusive and successful environmental policies across the globe.

India Opens Doors for Voluntary Carbon Credit Buyers

In 2023, India introduced the Carbon Credit Trading Scheme (CCTS) that includes both mandatory and optional sectors. The mandatory sector will start in 2025-26, but the start date for the optional carbon market hasn’t been decided yet.

Under this new carbon market scheme, required entities can purchase more credits or sell any extras they may have. To help reduce their emissions, businesses can also trade Carbon Credit Certificates (CCCs).

Businesses that struggle to cut emissions, particularly those with maintaining emission issues, are exploring alternative solutions like trading energy-saving certificates (ESCerts) and renewable energy certificates (RECs).

India has become a popular place for energy transition investments, especially after successfully hosting the G20 Summit last year. In that year, the country added around 17 GW of new capacity, with 13.8 GW coming from non-fossil sources.

As shown, renewable energy has seen the largest growth in electricity supply capacity in India.

Additionally, India increased its financial support to develop the green hydrogen ecosystem and started preparing for its domestic carbon markets.

Important decisions about international participation in the carbon credit market are expected in 2024, which will shape India’s future involvement. Further discussions will cover the scheme’s scope, design, and procedures, including how it will connect with international standards and registries.

India’s Energy Transition Priorities to Drive Climate Action

India has shown a strong commitment to fighting climate change and supporting global efforts with the goal of lowering carbon emissions. India wants to improve its strategy for switching to cleaner energy this year while addressing issues with cost and energy security.

India’s energy policy will concentrate on a number of important parts of the electricity and green power industries, such as:

Promoting Clean Energy While Still Using Coal

Electricity Demand: Driven by economic growth, election-related activities, and the effects of El Niño, the demand for electricity is expected to increase.
Capacity Expansion: Total energy capacity is expected to grow by 60% compared to last year, with coal’s share in power generation slightly decreasing to 73.2% in 2024.

Increasing Domestic Fuel Supply

Coal Production: India aims to produce over 1 billion metric tons of coal domestically in 2024, highlighting the need to improve local fuel supplies.
Gas Production: Domestic gas production is expected to rise, encouraged by recent reforms in gas pricing.

Focusing on Green Hydrogen and Ammonia

Local Demand: There will be efforts to create local demand and support the extra costs involved.
New Initiatives: New programs will be introduced to gather demand from public sector units and major consumers.

Renewables as a Key Part of Climate Policy

Renewable Capacity: Over 20 GW of new renewable energy capacity is expected to be added in 2024, helped by falling module costs and a backlog of tenders.
Hybrid and Storage Tenders: There will be more focus on hybrid renewable projects and stand-alone storage tenders to improve energy stability and efficiency.

Additional Focus Areas

Investment in Infrastructure: Significant investments will be made in renewable infrastructure, including grid improvements and battery storage systems, to support the expected capacity expansion.
Policy Reforms: Continued policy reforms will aim to streamline the approval process for renewable projects and attract foreign investments.
Research and Innovation: There will be encouragement for research and development in renewable technologies and sustainable practices to keep the momentum in the clean energy transition.

India’s comprehensive strategy not only highlights its commitment to reducing emissions but also aims to balance growth with sustainability, ensuring a resilient energy future.

Closing the Gap: Integrity Measures and Global Carbon Markets

The plan focuses on how important it is to have strong rules to make sure we reduce greenhouse gases and meet climate goals.

A recent report by the Carbon Market Institute found that global efforts to put a price on carbon raised a huge $100 billion in 2022, covering 23% of all greenhouse gases worldwide.

But even with these improvements, the promises made by governments might still lead to the Earth getting warmer by 2.1°C to 2.8°C. Carbon markets have a big potential to help close this gap and aim for a target of keeping the temperature rise to just 1.5°C.

Also Read: What’s The Carbon Footprint Of Biofuels?

Still, more work is needed to make sure these markets are fair and that countries work together.

In 2023, the global market for trading carbon credits grew a lot, reaching a total value of over $947 billion, up 2% from the year before. This growth was mainly driven by higher prices in important markets like Europe and North America, even though the amount of permits traded stayed steady.

Europe’s Emissions Trading System (ETS) was the most valuable market, making up 87% of the total worldwide. But lower demand from industries and the energy sector in late 2023 caused prices to drop going into 2024.

In contrast, prices hit record highs in North America, and China also saw prices rise a lot in its national carbon trading system in 2023.

India’s updated Carbon Credit Trading Scheme is a big step forward in reducing greenhouse gases worldwide. Along with the strong growth in the global carbon trading market, this shows progress in fighting climate change.

People are also realizing more and more how important it is to be clear and honest in carbon trading. They’re talking about better ways to check and enforce rules to make sure carbon credits are reliable. New technologies like blockchain are being tested to track and report emissions better, making carbon markets more trustworthy. This shows that the world is serious about reaching our climate goals.