India's Carbon Market Revolution: A Leap Towards a Greener Future

In a groundbreaking move in 2024, India has revamped its Carbon Credit Trading Scheme (CCTS), breaking new ground by allowing non-obligated entities to partake in the tradable carbon credits market. This monumental shift empowers companies and individuals to voluntarily address their carbon emissions, marking a significant stride in environmental responsibility.

India Opens Doors for Voluntary Carbon Credit Buyers:

In 2023, India introduced the 2023 Carbon Credit Trading Scheme (CCTS), encompassing both compliance and voluntary sectors. The compliance segment is set to kick off in 2025-26, while the launch timeline for the voluntary carbon market remains open. Under the revised scheme, obligated entities can purchase additional credits or sell surplus ones, while businesses can trade carbon credit certificates (CCCs) to offset their emissions. Sectors facing emission reduction challenges explore trading energy-saving and renewable energy certificates as offsets.

India, having added 17 GW of capacity in 2023, emerges as a prime destination for energy transition investments. With renewable energy witnessing the most significant growth in electricity supply capacity, the country has also increased financial support for green hydrogen initiatives and initiated preparations for its domestic carbon markets.

Key decisions on international participation and discussions on the scheme's scope, design, and procedures are expected in 2024, shaping India's trajectory in the carbon credit market.

India’s Energy Transition Priorities to Drive Climate Action:

India's commitment to combat climate change is evident in its move to intensify efforts in implementing its energy transition strategy. Prioritizing aspects of the power and renewables market, India anticipates significant renewable capacity additions, coal reliance decrease, improvements in domestic fuel supply, and a focus on green hydrogen and ammonia.

Bridging the Gap: Integrity Measures and Global Carbon Markets:

India's strategy emphasizes the importance of integrity measures in bridging the emissions reduction gap. Globally, carbon pricing mechanisms generated an impressive $100 billion in 2022, covering 23% of global greenhouse gas emissions. However, despite this progress, current government pledges could result in a temperature rise between 2.1°C and 2.8°C.

In 2023, global carbon trading markets reached a record value of over $947 billion, showcasing robust growth driven by higher prices in key markets. The EU's Emissions Trading System (ETS) maintained its dominance, accounting for 87% of the global total. However, challenges in industrial demand and the power sector persist into 2024.

India's revised CCTS and the global carbon trading market's growth signify a promising trajectory towards reducing greenhouse gas emissions globally. This bold move aligns with India's commitment to a sustainable future and the worldwide endeavor for decarbonization.