Amendments to Carbon Credits Trading Scheme (CCTS) in India
- December 22, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Amendments to Carbon Credits Trading Scheme (CCTS) in India
Subject : Environment
Section: Climate change
Introduction:
- The Ministry of Power in India has introduced amendments to the Carbon Credits Trading Scheme (CCTS).
- These amendments pave the way for India to establish its own standards for carbon trading.
Role of Bureau of Energy Efficiency (BEE):
- The amendments instruct the carbon credits administrator, the Bureau of Energy Efficiency (BEE), to develop standards and register projects under the offset mechanism.
- BEE is tasked with both “validation” and “verification” of carbon credits, as opposed to only “verification” in the original scheme.
Deepening Indian Carbon Credit Market:
- The amendments aim to deepen the Indian carbon credit market by allowing ‘non-obligated entities’ to register decarbonization projects and generate carbon credits.
- Non-obligated entities, which were initially limited to purchasing credits, can now register projects and seek the issuance of Carbon Credit Certificates.
Offset Mechanism for Non-Obligated Entities:
- The introduction of an “offset mechanism” allows non-obligated entities to register projects for accounting greenhouse gas emission reduction or removal, leading to the issuance of Carbon Credit Certificates.
Prescribing Limits for Non-Obligated Entities:
- Non-obligated entities, unlike obligated entities, do not have a prescribed limit for their greenhouse gas emissions.
- The Bureau of Energy Efficiency (BEE) is tasked with identifying sectoral scope and methodologies for the offset mechanism with the support of technical committees.
Elimination of Overseas Certification Dependency:
- Once BEE establishes standards, Indian entities will no longer have to rely on overseas standards agencies for validating their carbon credits.
- The move is expected to reduce costs and time associated with overseas certification, making it more convenient for Indian carbon credit generators.
These amendments reflect efforts to enhance and streamline the carbon credits trading scheme in India, providing a regulatory framework that encourages participation from a broader range of entities in decarbonization projects.
About Carbon Credit
The term “Carbon Credit” refers to a tradable permit that represents the right to emit a specific amount of carbon dioxide or an equivalent amount of another greenhouse gas.
Essentially, a carbon credit is a unit of measurement that equals one tonne of carbon dioxide that has been removed, reduced, or sequestered from the atmosphere. It is a market-based approach to incentivize businesses and countries to reduce their greenhouse gas emissions.
Carbon Credit Trading Scheme (CCTS)
- The ‘CCTS’ stands for the Carbon Credits Trading Scheme, and it is a scheme for the reduction or removal of greenhouse gas (GHG) emissions. The central government notifies and governs this scheme.
- Background: The Energy Conservation (Amendment) Bill, 2022, empowered the central government to specify the carbon trading scheme in consultation with the Bureau of Energy Efficiency (BEE).
- Features of CCTS:
- Accredited Carbon Verifier: An accredited agency, recognized by the BEE, is responsible for validation or verification activities under the CCTS.
- Indian Carbon Market Governing Board (ICMGB):
- Established for oversight, rule-making for the Indian carbon market, and guidelines for selling carbon credit certificates abroad.
- Environment secretaries serve as ex-officio co-chairmen.
- Meets at least once a quarter.
- Bureau of Energy Efficiency (BEE):
- Administers the Indian carbon market and acts as the secretariat for ICMGB.
- Grid Controller of India Ltd: Serves as the registry for the Indian Carbon Market.
- Central Electricity Regulatory Commission (CERC): Regulator for trading activities under the Indian carbon market.
- Types of Carbon Markets:
- Compliance Markets: Created to comply with laws and regulations.
- Voluntary Markets: Involves the voluntary issuance, buying, and selling of carbon credits.
- Features of The Energy Conservation (Amendment) Act 2022:
- Establishes provisions for carbon markets to encourage carbon trading and reduce emissions.
- Mandates the use of non-fossil sources for energy and feedstock.
- Establishes a domestic carbon market in India.
- Brings large residential buildings under the Energy Conservation regime.
- Enhances the scope of the Energy Conservation Building Code.
- Amends penalty provisions for stricter enforcement.
- Expands the governing council of the Bureau of Energy Efficiency.
- Empowers State Electricity Regulatory Commissions for energy conservation functions.
- Mandates the use of clean energy, including green hydrogen.
BEE Star Rating
The BEE Star Rating, implemented through the Standards and Labelling Program introduced in 2006, is a labeling system that provides consumers with information about the energy efficiency of various appliances.
Bureau of Energy Efficiency (BEE):
- BEE is a statutory body established under the Energy Conservation Act, 2001.
- BEE assists the government in developing policies and strategies focused on self-regulation and market principles. The primary objective is to reduce the energy intensity of the Indian economy.
State Energy Efficiency Index (SEEI) 2021-22
The State Energy Efficiency Index (SEEI) 2021-22 is an assessment framework developed by the Bureau of Energy Efficiency (BEE) in collaboration with the Alliance for an Energy-Efficient Economy (AEEE). The index aims to track the progress of states and union territories (UTs) in implementing energy efficiency initiatives.
Framework and Indicators:
- SEEI 2021-22 employs an updated framework with 50 indicators aligned with national priorities.
- These indicators are designed to monitor the outcomes and impacts of state-level energy efficiency initiatives.
Objective:
- The primary objective of SEEI is to drive decarbonization efforts in states.
- It provides a basis for outlining recommendations to assist states in promoting energy efficiency.
- The ultimate goal is to contribute to the fulfillment of Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDC).