Why in News :
The Government has released draft rules under the Energy Conservation Amendment Act, 2022, to operationalize the Carbon Credit Trading Scheme (CCTS).
The rules define compliance mechanisms, set emission targets, and outline roles for BEE and CERC.
Key Highlights of the Draft Rules
Greenhouse Gas Emission Intensity (GEI)
- Defined as tonnes of CO₂ equivalent emitted per unit of output.
- Crucial metric for benchmarking industrial performance.
Legally Binding Emission Targets
- Over 400 industrial units to receive specific GHG intensity targets.
- Sectors: Aluminium, Iron & Steel, Petroleum Refining, Petrochemicals, Textiles.
Penalties for Non-Compliance
- Penal provisions under Environment (Protection) Act, 1986.
- Creates enforceability and legal backing for industrial decarbonisation.
Carbon Credit Trading Scheme (CCTS): Key Provisions
Goal & Legal Basis
- Aim: Reduce GHG emissions through carbon pricing mechanisms.
- Legal Backing: Energy Conservation Amendment Act, 2022.
Two-Tier Credit Mechanism
- Compliance-Based Credits: For obligated entities that perform better than their assigned emission target. They earn Carbon Credit Certificates that can be traded or banked.
- Voluntary Offset Mechanism: Open to non-obligated entities (e.g., MSMEs, agriculture, service sectors) that implement GHG reduction/removal projects. Projects get verified and earn certified tradable carbon credits.
Institutional Roles
- Administrator: Bureau of Energy Efficiency (BEE)
Regulator: Central Electricity Regulatory Commission (CERC) – governs carbon trading protocols, pricing norms, market integrity.
Significance for India’s Climate Strategy
- Lays the foundation for a domestic carbon market, a key tool for cost-effective emissions reduction.
- Supports India’s Nationally Determined Contributions (NDCs) under the Paris Agreement.
- Helps sectors align with net-zero by 2070 target.
Global Context & Recognition
- India’s evolving CCTS featured in the World Bank’s “State and Trends of Carbon Pricing 2025” report.
- Highlights India as a growing leader in climate finance architecture and market-based emission control tools.
- Aligns with global shift towards carbon markets as part of Article 6 of the Paris Agreement.
| UPSC Mains Relevance GS3 – Environment (Climate Change, Pollution, Environmental Governance) GS2 – International Relations (Paris Agreement, UNFCCC obligations) GS3 – Economy (Carbon Market, Regulatory Framework) Possible Mains Questions Q. “India’s Carbon Credit Trading Scheme 2025 aims to balance industrial growth with environmental sustainability.” Discuss the structure and significance of CCTS in meeting India’s climate commitments. (250 words) |