Save the carbon bubble: India’s voluntary carbon market must be regulated and made to contribute to its climate goals

Subject :Environment

Section: Climate Change

Context:

In May this year, the Zimbabwe government declared all voluntary carbon credit schemes “null and void”, causing huge consternation to the developers of the projects.

Carbon markets:

The carbon market should be a real market, not a secret pact between a buyer and seller
If not properly evaluated, projects under the carbon market can lead to more GHG emissions
Countries have sold off all cheap options of emission reductions. They would now be in the balance sheet of foreign entities and and will not be able to make investments in hard-to-abate options

Regulation of voluntary carbon markets across globe:

Countries that have announced some ind of regulations to their voluntary carbon markets are: Zimbabwe, Papua New Guinea, Rwanda, Indonesia and Nigeria.

India’s notification on carbon trade:

India is enacting legislations and policies by different ministries—and it is not clear how coordinated these actions are—to create and regulate a carbon credits market and to incentivise people to join a green credits programme.

The Union power ministry issued a notification on its Carbon Credit Trading Scheme.

Under this, the government would constitute a National Steering Committee for the Indian carbon market.
The committee would be tasked with the governance of the Indian carbon market and direct oversight of its functioning.
The Bureau of Energy Efficiency, an agency under the power ministry, would be the designated administrator of the Indian carbon market.
The Grid Controller of India Limited shall act as the registry and the Central Electricity Regulatory Commission will be the
The notification is silent on the voluntary carbon market or the issue of export of credits.

The Union environment ministry notified the Draft Green Credit Programme Implementation Rules, 2023.

The programme is a domestic voluntary market that incentivises voluntary environmental actions so that it promotes the government’s Mission LiFE (Lifestyle for Environment).
It has listed actions, including planting trees, which would get “green credits” and is described as “singular unit of an incentive provided for a specified activity delivering a positive impact on the environment”.
It goes on to say that an activity generating green credits under the green credit programme may also acquire carbon credits for the same activity under the carbon market. These green credits will be traded on a domestic market platform.
The Indian Council of Forestry Research and Education will be the administrator, who will create technical or sectoral committees to develop methodologies, standards and processes for registration of green credit activities and grant of green credits.
It opens the compensatory afforestation activities by private entities to incentives and participation in the domestic carbon market.

As an implementation measure for the Paris Agreement, the government in February 2023, issued a list of activities that could be considered for trading of carbon credits under bilateral programmes under Article 6.2.

This list includes renewable projects, including solar projects with storage, offshore wind, hydrogen and the best available technologies for the hard-to-abate sector.
In this list, the government’s effort is to ensure that bilateral trading of carbon credits is in the high-end sectors, which would be expensive for India to undertake.

Source: DownToEarth