Centre to notify carbon emission intensity targets by month end

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| Photo Credit: AP

The government is expected to announce emissions intensity targets for nine industrial sectors by the end of the month — a crucial step to operationalise India’s carbon trading scheme. Following this, these industries will have a year to put in place compliance measures to cut emissions, and trading in carbon credits is likely to begin by October 2026, Saurabh Diddi, Director, Bureau of Energy Efficiency (BEE) under the Union Ministry of Power, told The Hindu on the sidelines of a conclave here on India’s carbon markets.

Despite a notification by the BEE in June 2023 announcing a carbon credit trading scheme (CCTS), and follow-up notifications in March 2024 on the industrial sectors that would have to mandatorily comply, emission-intensity targets still haven’t been specified. Without these, it will not be possible to generate or trade carbon credits.

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The Indian carbon market establishes a framework to reduce, remove, or avoid greenhouse gas emissions (GHG) from the Indian economy. It achieves this by pricing greenhouse gas emission reduction through trading of carbon credit certificates.

Different types of carbon markets exist globally. In European emission trading markets, every carbon credit represents a tonne of carbon dioxide prevented from getting into the atmosphere. Its price fluctuates and is determined by whether companies, which must comply with government-mandated emission caps, manage to meet them or choose to buy credits from companies that have cut more emissions than they were required to. These carbon credits can then be traded like shares.

In the case of India, industries will not be required to cut carbon emissions. Rather, they must produce their goods — for example, a kilogramme of steel — more efficiently. This can mean implementing technology that will burn, say, in this instance, less coal to produce that same kilogramme of steel. Or recover the heat from burning a kilo of steel and re-using it.

Emissions intensity refers to the amount of greenhouse gases emitted per unit of activity. The nine sectors that must comply with emission intensity targets in India are iron and steel, aluminium, chlor-alkali, cement, fertilizers, pulp and paper, petrochemicals, petroleum refineries, and textiles.

“We have been having multiple consultations with industry in these past months and we are almost ready with the targets. Along with the compliance scheme (of emission intensity), there is also a market emerging of voluntary offsets. We are hoping that these offset markets can begin trading even this year, provided certain criteria are met,” Mr. Diddi said.

Voluntary offsets refer to measures undertaken by private individuals, including afforestation, that can trap carbon dioxide as commercial projects. These too generate carbon credits and companies sell them, internationally as of now, to those that require them to meet the compliance regulations.

As part of its climate commitments, India has said it will reduce the emissions intensity of its GDP at 45% of 2005 levels by 2030. It sees its carbon markets as a step toward achieving that.

The government expects that not all Indian industries, particularly small and medium enterprises, will be able to comply and, therefore, expects to give them more leeway. “As part of the compliance mechanism, there will be a gradual implementation of carbon reduction targets, with a 40% reduction by 2027 and the remaining by 2030.” Akash Tripathi, Additional Secretary, Ministry of Power, said at the conclave.