Giving shape to India’s carbon credit mechanisms.

 Giving shape to India’s carbon credit mechanisms.

Published - November 12, 2024 01:15 am IST

India’s carbon credit mechanism needs to be aligned with international and domestic realities if it is to be effective

Shashank Pandey

In Baku, Azerbaijan | Photo Credit: REUTERS

The Conference of Parties-29, from November 11 to 22, 2024, in Baku, Azerbaijan, is about to shift focus to the heated discussion on the aspect of climate finance again. An essential component of this discussion will be the carbon credits framework and disagreements over it between developed and developing countries. India updated its Nationally Determined Contributions (NDCs) in 2023 to underline, among other things, the establishment of a domestic carbon market as a part of its climate strategy. The Energy Conservation (Amendment) Act of 2022 provided a statutory mandate for such a Carbon Credit Trading Scheme (CCTS). Through this, India aims to align its climate commitments under the Paris Agreement with broader economic goals. Yet, for the market to truly support these objectives, it must be meticulously designed to ensure credibility, efficiency, and fairness. From global experiences, India must incorporate two pivotal lessons in its carbon market framework for long-term success.