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The Ministry of Energy has recently notified the Carbon Credit Trading Scheme (CCTS) in India, marking a significant step towards establishing a national carbon market. The scheme aims to facilitate the trading of carbon credits between obligated entities within the country.
Choubey informed the Rajya Sabha that the Ministry of Power notified the Carbon Credit Trading Scheme (CCTS) on June 23, 2023. The framework for the functioning of India's carbon market is provided by the scheme. In the domestic market, CCTS enables the trading of carbon credits among obligated entities. The compliance mechanism notifies registered entities as obligated entities.
Under the CCTS framework, registered entities designated as "obligated entities" will participate in the carbon credit trading process under the compliance mechanism. This will allow industries, companies, organizations and individuals to participate in the trading of carbon credits within the internal market.
Responding to a query in the Rajya Sabha, Ashwini Kumar Choubey, Minister of State at the Ministry of Environment, Forests and Climate Change, clarified that Article 6 of the Paris Agreement allows for the trading of carbon credits on international markets. However, said negotiation will be subject to the approval of the Designated National Authority for the Implementation of Article 6 of the Paris Agreement (NDAIAPA).
NDAIAPA, established on May 30, 2022, has already approved a list of 13 activities under the Article 6.2 mechanism. These activities are eligible for carbon credit trading under bilateral/cooperative approaches, facilitating the adoption of costly emerging technologies that require feasibility gap financing.
Carbon credits from approved activities may be exchanged between two countries, and NDAIAPA will consider meeting Nationally Determined Contributions (NDC) targets when approving the exchange of carbon credits under Article 6.2.
In addition, the mechanism of Article 6.4 of the Paris Agreement allows the commercialization of carbon credits for projects in the international carbon market. The UNFCCC (United Nations Framework Convention on Climate Change) has the mandate to oversee the methodologies and processes related to this mechanism.
India's move towards implementation of the Carbon Credit Trading Scheme is expected to play a crucial role in addressing the challenges of climate change. The scheme will not only bolster the nation's carbon market, but also contribute to achieving its NDCs, which were agreed during the landmark 2015 Paris Climate Change Meeting.
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