carbon trade policy for india


India must develop a transparent carbon trade policy



29th edition of the Conference of Parties in Baku





Ahead of the 29th edition of the Conference of Parties in Baku, Azerbaijan.


theme of this edition 


of the COP is increasing ambition on climate finance, a key item on the agenda is clarity on carbon markets. 


what is Carbon trading ? 




it is also known as carbon emission trading, is the buying and selling of permits and credits that allow entities to emit carbon dioxide and other greenhouse gases: 

  • Purpose
    Carbon trading is a market-based mechanism that aims to reduce carbon emissions by incentivizing companies to lower their greenhouse gas output. 

  • How it works
    Entities that emit more than their government's allowance can buy credits to pollute more, while those that emit less can sell their remaining permits. 

  • Benefits
    Carbon trading can help countries meet their pledges under the Paris Agreement. It can also help generate funds to build resilience and create an economic incentive to reduce emissions


Paris Climate Agreement of 2015, called Article 6




the enabling of trading of prevented greenhouse gas emissions among countries —can be operationalised. 


Carbon markets 

incentivise climate action by enabling parties to trade in carbon credits generated by the reduction or removal of greenhouse gases from the atmosphere, such as by 

  1. switching from fossil fuels to renewable energy 
  2.  enhancing / conserving carbon stocks in ecosystems such as forests.


 Subsections within Article 6 


provide guidelines on what kinds of carbon-reduction activities and verification mechanisms are permissible


and how countries may enter into bilateral agreements so that emission reductions in one country may be legally claimed by another.


criticism of  carbon markets 




criticism of  carbon markets came into existence nearly two decades ago, they have opacity 


criticism that they only created the illusion / confusion of emission reductions , and  how credits may be verified. 



Baku may see a final resolution of this problem and india 


and that the first legal credits may begin to be claimed by countries next year. 


India, due to its voluntary commitment to generate half its electricity from non-fossil energy sources by 2030, stands to gain as a host of several carbon-reduction projects. 


enterprises in India  

mushrooming private sector enterprises in India setting up innovative forestry projects that reportedly lock carbon and can be claimed as credits by multinational companies, traded through so-called voluntary carbon markets


India’s iron and steel industries are among the nine types of industries expected to meet emission intensity standards by 2025. 


By restricting the amount of carbon per unit of production


 this will, depending on regulatory enforcement, formally kick-start India’s carbon market. 


However, this will invite complex calculations and, given the experience of a related energy-efficiency trading scheme, run the risk of not exerting enough pressure on companies to comply. 


While calculating carbon saved is a fraught exercise, India must aim, through its research institutions and authorities, to evolve a transparent and fair policy that is on a par with the best internationally.


source the hindu

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