Non-fossil energy. Shopping for net-zero in carbon markets

Subject :Environment

Context:

The Energy Conservation (Amendments) Bill, 2022, passed by the Rajya Sabha recently, mandates the use of non-fossil energy sources such as biomass, ethanol and green hydrogen to ensure faster decarbonisation of the Indian economy.

Features of the act:

The current trading schemes in India — energy saving certificates (ESCerts) and renewable energy certificates (RECs) will be merged into a single commodity called ‘carbon credits certificate’ (CCC) and operate under the ‘cap and trade’ system of the National ETS.
- With the implementation of the National ETS, the domestic carbon credits market will enable the development of higher quality sources of carbon credits, benefiting both buyers and sellers and, ultimately, supporting progress toward a low-carbon future.
It empowers the central government to specify a trading scheme for carbon credits.
- Under this, the central government or any authorised agency may issue carbon credit certificates to entities registered and compliant with the scheme.
- The entities can trade the certificates. Anyone can purchase a carbon credit certificate on a voluntary basis.
The Act will encourage the use of non-fossil sources of energy.
- It empowers the government to direct ‘designated consumers’ to meet a minimum share of energy consumption from non-fossil sources.
- Different consumption thresholds may be specified for different non-fossil sources for the designated consumers who comprise
  - industries such as mining, steel, cement, textile, chemicals, and petrochemicals;
  - transport sector including railways; and
  - commercial buildings, as specified in the schedule.

Scope of the act:

It brings large residential buildings within the scope of the Energy and Sustainable Building Code.
- The new code will provide norms for energy efficiency and conservation, the use of renewable energy, and other requirements for green buildings.
- Under the Bill, the new Energy Conservation and Sustainable Building Code will also apply to office and residential buildings meeting the above criteria.
Energy consumption standards may be specified for equipment and appliances that consume, generate, transmit, or supply energy.
- It expands the scope to include vehicles (as defined under the Motor Vehicles Act, 1988), and vessels (including ships and boats).

Formation of National carbon registry:

A new ‘registered entity’ — the National Carbon Registry, under the central government or an agency authorised by it, has been proposed for registering new projects with ‘measurement, verification and reporting’ protocols in line with international registry systems.
‘Designated consumers’ and other consumers deemed appropriate will be part of the scheme — the ‘obligated entity’ will be allowed to sell and purchase CCCs. Other entities (non-obligated) can participate as purchasers.
A national carbon registry under the Bureau of Energy Efficiency or a future ‘carbon regulatory commission’ will be formulated and linked to the Centralised Accounting and Reporting Platform (CARP) of the Article 6 supervisory body of the United Nations Framework Convention on Climate Change (UNFCCC).

Carbon Credits:

A carbon credit is a permit that allows the company that holds it to emit a certain amount of CO2 or other greenhouse gases.
One credit permits the emission of a mass equal to one tonne of carbon dioxide.
These were devised as a market-oriented mechanism to reduce greenhouse gas emissions.
Companies get a set number of credits, which decline over time.
They can sell any excess to another company.