India has passed a bill to set up carbon credit markets in the country but will not allow carbon credit exports until its climate goals are met, power minister Raj Kumar Singh said.
India had made emissions reduction commitments at the UN Cop 21 and Cop 26 climate conferences, Singh said on 8 August. "Now till so long as we do not meet those commitments we shall not allow any exports of carbon credits," he said. "Those carbon credits will have to be bought by domestic industries, generated by domestic industries."
India's lower house of parliament passed the Energy Conservation (Amendment) Bill 2022 on 8 August, which establishes carbon trading in the country and mandates the use of green hydrogen, green ammonia, biomass and ethanol for energy and feedstock.
India announced a target to achieve net zero emissions by 2070 at the Cop 26 summit in Glasgow last year, along with plans to cut carbon emissions by 1bn t by 2030 from 2005 levels. This compares with its pledge to reduce emissions per unit of GDP by 33-35pc below 2005 levels by 2030, under the Cop 21 Paris climate accords.
But most firms in the country's carbon-intensive steel, cement and fertilizer sectors have yet to commit to any net zero targets.
"Obligated entities which are not able to meet their targets of reducing their carbon emissions…will have to buy carbon credits or pay penalties," Singh said, adding that a carbon credit scheme could incentivise the energy transition in India.
The country currently awards renewable energy and energy efficiency certificates to companies, which can sell these to other firms that do not meet their targets and want to avoid paying penalties. "The carbon credit scheme will combine all these into one instrument," Singh said. Further details of the carbon trading market are yet to be announced.
India has set targets to boost the share of natural gas and lower dependence on coal in its energy mix, and have renewables cover 50pc of its energy demand by 2030, by when it also aims to produce 5mn t/yr of green hydrogen. It additionally plans to expand its installed renewable power generation capacity to 500GW by 2030 from a current 150GW, to help to meet its 2070 net zero target.
