Centre may soon create carbon markets for green industries

7 Jul 2023 , 11:02 AM

To promote carbon trading between clean and polluting industries, India aims to establish carbon markets for renewable energy, green hydrogen, biofuels, and clean transportation. According to a senior government source, Niti Aayog is developing a framework to expedite their development.

The source stated, ‘The sale of carbon credits will help generate funds that can be utilized to finance sustainable energy projects and other environmental initiatives.’ The government believes that expanding carbon markets will stimulate economic activity and create more job opportunities. Initially, the issuance, purchase, and sale of carbon credits will be voluntary in these markets.

However, in the future, the government may establish regulatory frameworks to establish compliance markets, where companies are required to trade carbon credits, thereby generating revenue. As green energy investments remain insufficient globally, including in India, and greenhouse gas emissions continue, carbon trading is deemed necessary.

During the COP27 climate summit held in Egypt last year, a report highlighted that India had the highest growth rate in carbon emissions among the world’s major contributors to global warming. The report projected a decrease of 0.9% and 0.8% in emissions for China and the European Union (EU), respectively, while India’s emissions were projected to rise by 6% and the US’s by 1.5%.

Carbon markets, as defined by the United Nations Development Programme, are platforms where carbon credits are bought and sold. Businesses and individuals can utilize carbon markets to offset their greenhouse gas emissions by purchasing carbon credits from organizations that reduce emissions.

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