Daily Prelims Notes 12 November 2024

Daily Prelims Notes

12 November 2024

Table Of Contents

1. Giving shape to India’s carbon credit mechanism
2. Key Terminology and Concepts at COP29
3. COP16: Will financial roadblocks continue to hinder conservation efforts?
4. Supreme Court Ruling on Aligarh Muslim University’s Minority Status: Key Aspects and Implications
5. Decoding Europe’s Digital Euro
6. Saudi and Kuwait may fill locals in skilled jobs handled by migrants

1. Giving shape to India’s carbon credit mechanism

Sub: Env

Sec: Climate Change

India’s Climate Strategy and Carbon Market Framework:

• India updated its Nationally Determined Contributions (NDCs) in 2023, emphasizing the creation of a domestic carbon market as part of its climate action plan.
• The Energy Conservation (Amendment) Act of 2022 provides a legal basis for the Carbon Credit Trading Scheme (CCTS) in India.
• The goal: Align India’s climate commitments under the Paris Agreement with broader economic objectives.
• However, a well-designed carbon market is essential for credibility, efficiency, and fairness. India must learn from global experiences for long-term success.

Key Lessons for India’s Carbon Market:

1. Ensuring Carbon Credit Integrity:
   • Integrity of carbon credits is critical to avoid issues like greenwashing, prevalent in the Voluntary Carbon Market (VCM).
   • Concerns exist over overstatements of project benefits, especially in forestry projects, as seen globally and feared in India’s own Green Credit Programme (GCP).
   • The lack of proper “additionality” (ensuring emission reductions go beyond business-as-usual scenarios) could undermine the effectiveness of the CCTS.
2. Aligning with Global Standards
   • India’s carbon market must align with international trading mechanisms, particularly Article 6 of the Paris Agreement.
     • Article 6.2 allows countries to use Internationally Transferred Mitigation Outcomes (ITMOs) for meeting climate targets, requiring stringent compliance.
   • The Article 6 rulebook, established at COP-26 (Glasgow), provides guidelines for transparent carbon trading while ensuring environmental integrity.

Emphasis on Transparency:

• Transparency is key to maintaining credibility and compliance in India’s carbon credit system.
  • Full disclosure of project details, including carbon reduction techniques and third-party verification reports, should be available on a centralized platform.
  • Regular audits and oversight by independent auditors (approved by the Bureau of Energy Efficiency (BEE)) are essential for verifying project sustainability.
  • Real-time tracking of credit transactions can enhance accountability and provide insights into the environmental impacts of projects.
• The Voluntary Carbon Markets Integrity Initiative (VCMI) framework suggests a tiered system for evaluating carbon credit claims to improve market transparency. However, India’s CCTS could face challenges such as transparency issues and the high costs of establishing monitoring, reporting, and verification (MRV) systems, which may deter smaller projects.

Carbon Credit Trading Scheme (CCTS) in India:

• The Carbon Credit Trading Scheme (CCTS) is a statutory framework established under the Energy Conservation (Amendment) Act, 2022 in India.
  • The Act designates the Bureau of Energy Efficiency (BEE) as the nodal authority for overseeing the scheme’s implementation and compliance.
• It is designed to facilitate the creation of a domestic carbon market, aligning with India’s climate commitments under the Paris Agreement.
• The CCTS aims to provide an economic mechanism for reducing greenhouse gas (GHG) emissions by enabling the trade of carbon credits across industries.

About Energy Conservation (Amendment) Act, 2022:

• It seeks to amend the 2001 Act to:
  • Facilitate the achievement of COP-26 goals, and
  • Introduce concepts such as mandated use of non-fossil sources and carbon credit trading to ensure faster decarbonization of the Indian economy.

Key Features of the Act:

Voluntary Carbon Markets Integrity Initiative (VCMI):

• VCMI is an international non-profit organization with a mission to enable high-integrity voluntary carbon markets (VCMs) that deliver real and additional benefits to the atmosphere, help protect nature, and accelerate the transition to ambitious, economy-wide climate policies and regulation.
• The Voluntary Carbon Markets Integrity Initiative (VCMI) was established in early 2021, with the aim of supporting demand-side integrity. That is, ensuring that corporates engaging in the carbon market are doing so in a manner which drives emissions reductions through the application of a mitigation hierarchy. This means that companies cannot solely rely on carbon credits to achieve their emissions reduction goals, but rather their use must be in addition to science-aligned decarbonisation investments where possible.
• To support organisations in making credible climate claims, the VCMI launched their Claims Code of Practice (CCP) in June 2022. The CCP provides organisations with clear standards and guidance on how they can credibly incorporate carbon credits into their climate action plans.
• The organization is fully aligned with the goals of the Paris Agreement and is committed to a world on track to 1.5 degrees and net zero emissions by mid-century, achieved through a just transition that enhances equality and sustainable development for all.
• It enables high-integrity voluntary carbon markets which contribute to the goal of the Paris Agreement, bringing benefits for people and the planet.

Green Credit Programme (GCP):

• The Green Credit Programme (GCP) is an initiative by the Union Environment Ministry aimed at incentivizing sustainable environmental practices and generating “green credits” that can be traded within a voluntary carbon market.
• The GCP is part of India’s broader strategy to address climate change and enhance its commitments under the Paris Agreement.

Key Objectives:

• Promote sustainable practices across various sectors like agriculture, forestry, and energy.
• Encourage corporate and community participation in climate-friendly activities.
• Facilitate the creation of tradable green credits, allowing businesses and entities to earn credits for their sustainable actions, which can be traded or used to offset their carbon footprints.

Major Components of the Green Credit Programme:

1. Voluntary Carbon Market (VCM) Integration
   • The GCP feeds into India’s voluntary carbon market, providing a platform for trading green credits.
   • It aligns with the Carbon Credit Trading Scheme (CCTS) established under the Energy Conservation (Amendment) Act, 2022.
2. Tree Plantation and Forestry Initiatives
   • One of the main activities under GCP is tree plantation, aimed at enhancing carbon sequestration and restoring degraded ecosystems.
   • However, concerns have been raised about the scientific validity of these projects, with critics arguing that the guidelines encourage practices that may lead to greenwashing (misleading claims of environmental benefits).
3. Community and Corporate Engagement
   • The GCP involves community groups, corporate entities, and local stakeholders in projects like afforestation, renewable energy, and waste management.
   • The programme aims to incentivize both individuals and companies to adopt greener practices by offering them tradable credits as rewards.
4. Verification and Accountability
   • To maintain the integrity of the green credits, India plans to implement strict verification protocols.
   • A proposed national registry would track the issuance and trade of green credits to prevent double-counting.
   • The involvement of independent third-party verifiers is critical to ensure the authenticity and additionality of projects, in line with international standards (e.g., IETA, Gold Standard).

Source: TH

2. Key Terminology and Concepts at COP29

Sub: Env

Sec: Climate Change

Why in News

• The 29th Conference of Parties (COP29) under the United Nations Framework Convention on Climate Change (UNFCCC) is currently taking place in Baku. This annual summit brings together global leaders and experts to address pressing climate issues, develop actionable policies, and set future climate targets. Here are some key terms and initiatives essential for understanding the global climate action framework.

United Nations Framework Convention on Climate Change (UNFCCC):

• Established in 1992, the UNFCCC is a global treaty that commits almost 200 countries to combat climate change and reduce greenhouse gas emissions. It provides the foundation for all subsequent climate agreements, including the COP summits, where participating nations discuss progress and future commitments.

COP (Conference of Parties):

• The annual gathering of countries that have ratified the UNFCCC treaty. This year marks the 29th meeting, known as COP29, being held in Baku. COP conferences allow member nations to review progress, discuss challenges, and set new targets to address climate change.

New Collective Quantified Goal on Climate Finance (NCQG):

• A central topic at COP29, the NCQG aims to set a funding target to support climate action in developing countries.
• The NCQG is intended to set a new global climate finance target for developed countries to support developing nations in their climate action efforts. It’s meant to succeed and expand upon the previous goal of mobilizing $100 billion annually by 2020, which was established at the 2009 Copenhagen Climate Conference.

Nationally Determined Contributions (NDC):

• The national pledges by countries to cut emissions are voluntary.
• The Paris Agreement requires all Parties to put forward their best efforts through “nationally determined contributions” (NDCs) and to strengthen these efforts in the years ahead.
• This includes requirements that all Parties report regularly on their emissions and on their implementation efforts.
• In 2018, Parties will take stock of the collective efforts in relation to progress towards the goal set in the Paris Agreement.
• There will also be a global stock take every 5 years to assess the collective progress towards achieving the purpose of the Agreement and to inform further individual actions by Parties.
• The next round of NDCs is due in February, with some nations planning early submissions at COP29 in Baku.

Global Warming:

• Refers to the increase in Earth’s average surface temperature due to rising greenhouse gas emissions.
• Primarily results from human activities, such as burning fossil fuels and deforestation.

Climate Change:

• Climate Change refers to long-term shifts and alterations in temperature, precipitation, wind patterns, and other aspects of the Earth’s climate system.
• These changes can occur due to natural processes, such as volcanic eruptions and solar cycles, or due to human activities, most notably the burning of fossil fuels, deforestation, and industrial processes.
• Human-induced climate change, primarily caused by increased greenhouse gas emissions, has led to global warming and intensified weather events, such as droughts, floods, and storms.

Greenhouse Gases (GHGs):

• Gases that trap heat in the Earth’s atmosphere, contributing to global warming. Major GHGs include carbon dioxide (CO₂) and methane (CH₄).
• Primarily released from fossil fuel combustion, agriculture, and industrial activities.

Net Zero:

• Achieving net zero emissions means that any greenhouse gases released are balanced by removal or offset efforts, such as reforestation or carbon capture technologies.
• Net zero aims to stabilize atmospheric GHG levels, thus limiting global warming.

Loss and Damage:

• At COP28, governments pledged $800 million to a Loss and Damage Fund, assisting nations impacted by climate-induced disasters.
• The fund’s director and host nation will outline how these funds will be allocated and seek additional contributions from member nations.

Carbon Offset (Carbon Credit):

• A mechanism that allows countries or companies to compensate for emissions by investing in environmental projects elsewhere.
• Carbon offsets are purchased to balance emissions, helping entities reach net-zero targets.

Article 6 of the Paris Agreement:

• Article 6 of the Paris Agreement provides for market and nonmarket approaches in achieving Nationally Determined Contributions (NDCs).
• On markets, Article 6 has been finally resolved in a balanced manner that takes into account the concerns of developing countries.
• The Article 6 market mechanisms will play a crucial role in driving investments from private and public enterprises into India and help us achieve our mitigation and adaptation targets.

3. COP16: Will financial roadblocks continue to hinder conservation efforts?

Sub: Env

Sec: Int conventions

Context:

• The 16th Conference of the Parties (COP16) to the U.N. Convention on Biological Diversity took place in Cali, Colombia.
• Main focus: Negotiating measures to halt and reverse biodiversity loss by 2030.
• Key challenge: Disagreements on financial responsibilities for implementing the proposed measures.

Highlights of COP16:

1. Inclusive Decision-Making
   • Established a permanent body for Indigenous people and local communities to ensure their input in biodiversity decisions.
   • Recognized the role of people of African descent in conserving biodiversity, aiming to integrate their traditional knowledge.
2. Biodiversity Funding (Cali Fund)
   • New framework requiring major corporations (e.g., pharmaceutical, biotech sectors) to share profits derived from genetic resources.
   • Companies must contribute 1% of revenue or 1% of profits, potentially exceeding $1 billion annually.
   • 50% of the fund will go to Indigenous communities for conservation efforts.
   • Contributions are voluntary, but this step aims to promote equitable benefit-sharing.
3. Biodiversity Defence:
   • New guidelines for managing invasive alien species through improved databases, trade regulations, and e-commerce coordination.
   • Emphasis on international cooperation and capacity-building for developing nations.
4. Momentum for Ocean Conservation
   • Upgraded process for identifying Ecologically or Biologically Significant Marine Areas (EBSAs) to protect critical ocean habitats.
5. One Health Approach
   • Established a Global Action Plan focusing on ecosystem, animal, and human health.
   • Aims to address shared drivers of biodiversity loss and poor health (e.g., deforestation, climate change).
   • Encourages collaboration among health professionals, conservationists, and policymakers.
6. Cautious Innovation (Synthetic Biology)
   • Discussed the potential and risks of bioengineered species for ecosystem restoration.
   • Agreed on the need for regulatory frameworks to balance innovation with ecosystem protection.

Challenges at COP16:

1. Financial Shortfall:
   • Disagreement on funding mechanisms for the Kunming-Montreal Global Biodiversity Framework (GBF), which aims to secure $700 billion annually by 2030.
   • Pledges at COP16 only reached $163 million, far below the target.
   • Developed nations resisted a dedicated global fund for conservation, leading to stalled discussions.
2. Monitoring and Implementation Issues
   • Limited progress on implementing the GBF due to inadequate monitoring frameworks.
   • Only 44 out of 196 countries submitted updated National Biodiversity Strategies and Action Plans (NBSAPs).
   • Lack of a mandatory enforcement mechanism could undermine the 2030 targets.

India’s Role at COP16:

• India presented its updated NBSAP, aiming to halt and reverse biodiversity loss by 2030, and achieve harmonious coexistence with nature by 2050.
• Key focus areas:
  • 23 national biodiversity targets with a transformative approach.
  • Emphasis on inter-agency cooperation, financial solutions, and community involvement.
  • Prioritizes restoring degraded ecosystems, protecting wetlands, and sustainable marine management.

Source: TH

4. Supreme Court Ruling on Aligarh Muslim University’s Minority Status: Key Aspects and Implications

Sub: Polity

Sec: Constitution

Why in News

• The Supreme Court of India recently overturned a landmark 1967 judgment, enabling Aligarh Muslim University (AMU) to potentially claim minority institution status. The judgment, reversed the S. Azeez Basha vs. Union of India ruling, which had previously denied AMU this status. This decision is significant for AMU’s future autonomy and its ability to reserve seats for Muslim students, sparking discussions on the rights of minority institutions in India.

Background of the Case

• AMU was originally established as Muhammadan Anglo-Oriental (MAO) College in 1875 by Muslim reformer Sir Syed Ahmed Khan to provide modern education rooted in Islamic values.
• In 1920, the Aligarh Muslim University Act (AMU Act) transformed MAO College into AMU, an institution primarily for Muslims but open to students of other religions.
• Initially, only Muslims could be members of AMU’s governing body (the “Court”), but this mandate was removed in 1951.
• 1967 Azeez Basha Judgment: It held that AMU could not be a minority institution since it was established by central legislation, not by the Muslim community itself.
• 1981 Amendment of AMU Act: In response to the 1967 judgment, the AMU Act was amended in 1981 to officially recognize AMU’s minority status.
• In 2005, AMU introduced a policy to reserve 50% of seats in postgraduate medical courses for Muslim students. This was challenged, and the Allahabad High Court struck it down based on the Azeez Basha ruling.
• In 2006, the Supreme Court stayed the reservation policy, and the case was referred to a larger bench.
• In 2019, the case was assigned to a seven-judge bench for a comprehensive review, culminating in the recent 2023 verdict.

What does the Constitution say about minorities?

• Article 29, which deals with the “Protection of interests of minorities”, says that “any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same”, and that “no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them”.
• Article 30: Article 30 of the Indian Constitution states the right of minorities to establish and administer educational institutions.
• It says: “All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice.”
• Article 30(1A) deals with the fixation of the amount for acquisition of property of any educational institution established by minority groups.
• Article 30(2) states that the government should not discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language, while giving aid.
• According to the T.M.A. Pai Foundation (2002) ruling, minority status should be determined based on the demographic composition of the relevant state rather than the national population.
• Minority institutions have greater autonomy compared to others and are exempt from providing reservations for Scheduled Castes and Scheduled Tribes (SC/ST) under Article 15(5).
• They are permitted to reserve up to 50% of their seats for students from their own community.
• The Supreme Court majority held that educational institutions established before the Constitution’s adoption are equally entitled to Article 30(1) protections.
• CJI clarified that legal recognition or status under statutory enactments does not negate an institution’s minority character if it was established primarily to benefit a minority community.

5. Decoding Europe’s Digital Euro

Sub: Eco

Sec: Monetary Policy

Why in News

• The European Central Bank (ECB) has officially entered the “preparation phase” for launching a central bank digital currency (CBDC) known as the digital euro. This digital euro is intended to serve as a government-backed alternative to existing digital payment methods and seeks to offer a cost-effective, reliable, and anonymous payment option.

What is CBDC?

• The term central bank digital currency (CBDC) refers to the virtual form of a fiat currency.
• A CBDC is an electronic record or digital token of a country’s official currency.
• As such, it is issued and regulated by the nation’s monetary authority or central bank. As such, they are backed by the full faith and credit of the issuing government.
• CBDCs can simplify the implementation of monetary and fiscal policy and promote financial inclusion in an economy by bringing the unbanked into the financial system.
• Because they are a centralized form of currency, they may erode the privacy of citizens.

Purpose and Functionality of the Digital Euro:

• Unlike other digital payment methods (credit cards, apps, cryptocurrencies), the digital euro will be issued directly by the ECB. This positions it as a state-backed digital alternative to traditional currency, available for direct transactions without intermediaries.
• The digital euro can be accessed and transferred through various devices, including smartphones and computers, potentially using Bluetooth, browser extensions, or contactless smartphone features.
• With a focus on reducing transaction costs, especially for micro-payments, the digital euro is expected to foster business models that were previously unfeasible due to high service provider fees.
• Unlike digital bank transfers or services like PayPal that involve intermediaries and debt claims between financial institutions, the digital euro acts as a direct, legal digital equivalent of cash.
• By establishing a form of money outside the banking system’s debt-based framework, the digital euro introduces new dimensions of currency utility, empowering users to conduct transactions independently of traditional banks.
• One of the unique features of the digital euro is its offline functionality, enabling anonymous, internet-independent payments—positioned as a significant advantage in maintaining cash-like privacy.

Strategic Economic and Political Motives:

• By creating a state-controlled digital payment method, the ECB aims to reduce Europe’s reliance on non-European digital payment providers (e.g., U.S.-based companies) and bolster the EU’s control over its financial infrastructure.
• The ECB’s digital euro initiative aligns with Europe’s broader strategy to establish a more competitive payments landscape, potentially challenging foreign payment service providers and advancing the euro’s status as a global digital currency.
• This move reflects Europe’s intent to prevent dependency on foreign (especially U.S.) financial systems and technologies, seeking to assert digital sovereignty within the global economy.

6. Saudi and Kuwait may fill locals in skilled jobs handled by migrants

Sub : IR

Sec: Places in news

Context:

• A recent study examined migrant labour trends in Kuwait and Saudi Arabia, focusing on Indian workers. Published in Structural Change and Economic Dynamics, it analysed current and future employment patterns of migrants in these countries.

Decline in job opportunities:

• The study indicates a potential decline in job opportunities for Indian workers in the GCC countries.
• The growing trend of upskilling the local workforce in Saudi Arabia and Kuwait may result in the replacement of high-skilled migrant labour with nationals. This could significantly impact Indian workers, who have traditionally filled many of these roles.
• Unlike Western countries facing labour shortages, the GCC still has a growing working age population.
• The study noted that reliance on expatriate labour for low-skilled jobs will continue unless significant automation is introduced.

Impact on India:

• According to the study, this trend presents a medium-to-long-term risk for countries like India as Indian labourers will get replaced in the long term.
• A reduction in employment opportunities for Indian workers in GCC countries could affect remittance inflows, which are an important source of income for many families in India.
• The Indian government may need to focus on providing employment opportunities for migrant workers in other regions or sectors to mitigate potential job losses in the GCC.

Wage Disparity:

• The study found that wages for migrant workers in the GCC are significantly lower than those of native workers.
• However, this wage gap is largely due to policy distortions rather than market forces.

Higher Productivity of Migrants:

• Despite earning lower wages, migrant workers exhibit higher productivity levels than local workers in both Kuwait and Saudi Arabia. This productivity advantage, combined with lower wages, leads to a notable difference in labour costs between migrant and national workers.
• This makes it difficult for firms, especially in the private sector, to replace migrant workers with nationals.