Carbon Markets - The Hindu - 20/12/22
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.
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.
-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
-May Increase Net Emission through ETS