Carbon Markets - The Hindu - 20/12/22

Context:
The Parliament has passed the Energy Conservation (Amendment) Bill, 2022 in order to establish Carbon Markets in India and specify a Carbon Trading Scheme. The Bill amends the Energy Conservation Act, 2001.
Relevance:
GS3; Conservation
About:
Energy Conservation (Amendment) Bill, 2022: The Bill empowers the Centre to specify a carbon credits trading scheme.
Under the Bill, the central government or an authorised agency will issue carbon credit certificates to companies or even individuals registered and compliant with the scheme.

Concerns:
-Bill does not provide clarity on the mechanism to be used for the trading of carbon credit certificates— whether it will be like the cap-and-trade schemes or use another method— and who will regulate such trading.
-It is not specified, which is the right ministry to bring in a scheme of this nature,

-Carbon Markets: Carbon markets are a tool for putting a price on carbon emissions. It allows the trade of carbon credits with the overall objective of bringing down emissions. These markets create incentives to reduce emissions or improve energy efficiency.
-It establishes trading systems where carbon credits or allowances can be bought and sold.

->Types of Carbon Markets:-

i. Compliance Markets: Compliance markets are set up by policies at the national, regional, and/or international level and are officially regulated.
ii. Voluntary Markets: Voluntary markets are those in which emitters— corporations, private individuals, and others— buy carbon credits to offset the emission of one tonne of CO2 or equivalent greenhouse gases.

-Status of Global Carbon Markets: In 2021, the value of global markets for tradeable carbon allowances or permits grew by 164% to a record 760 billion euros (USD 851 billion), according to an analysis by Refinitiv.
The EU’s ETS contributed the most to this increase, accounting for 90% of the global value at 683 billion euros.

-> Challenges to Carbon Markets:
-Poor Market Transparency
-Greenwashing
-May Increase Net Emission through ETS