India has taken a major step toward fighting air pollution and climate change by implementing emission intensity targets for 282 industrial units across high-polluting sectors like aluminium, cement, chlor-alkali, and paper. The government has also launched a compliance carbon market aimed at reducing carbon emissions through a market-driven approach.
What Is the Compliance Carbon Market?
Under the new carbon market system, Obligated Entities (OEs)—companies in regulated sectors—must limit their emissions according to government-set benchmarks. If they fail to comply, penalties will be imposed. If they successfully reduce emissions below the limit, they receive Carbon Credit Certificates (CCCs).
These certificates can be:
- Used to offset their own emissions
- Sold to other companies that exceed their emission limits
This system incentivizes emission reduction while creating financial opportunities for eco-conscious industries.
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What Are Carbon Credit Certificates?
Carbon credit certificates represent the successful reduction or avoidance of one metric ton of carbon dioxide (CO2) or other greenhouse gases (GHGs). These certificates are issued by regulatory bodies when companies undertake eco-friendly projects like:
- Renewable energy initiatives
- Reforestation and afforestation programs
- Energy efficiency upgrades
Companies that go over their limits can buy credits from firms with a surplus, forming a market-based approach to environmental compliance.
Voluntary Participation and CSR Impact
Even companies that are not mandated to participate can voluntarily purchase carbon credits. This is often done as part of their corporate social responsibility (CSR) or to support ethical environmental practices.
Key Benefits of India’s Carbon Market
- Encourages green investments by rewarding companies with surplus credits
- Promotes cleaner production practices in heavily polluting industries
- Offers financial flexibility for industries to stay compliant
- Supports national and global climate goals in line with the Paris Agreement
With the formal launch of its carbon trading market, India joins a growing list of countries implementing carbon pricing mechanisms to mitigate climate change. This move is expected to drive innovation, ensure accountability, and significantly reduce air pollution and greenhouse gas emissions.
