Carbon Credit Trading Scheme: Targets for Eight Sectors
Why in the news
India announced emissions intensity targets under the Carbon Credit Trading Scheme (CCTS) for eight energy-heavy sectors in its compliance carbon market. Firms that beat their targets can sell the surplus credits.
Key facts
| Sectors given targets |
|---|
| Cement |
| Textile |
| Aluminium |
| Iron and steel |
| Chlor-alkali |
| Paper and pulp |
| Petroleum refineries |
| Petrochemicals |
- CCTS is a market-based tool under the Indian Carbon Market (ICM), regulating emission intensity of greenhouse gases.
- It replaces PAT: energy-saving certificates give way to Carbon Credit Certificates (CCC), each worth 1 tCO2e reduced.
How CCTS works
- Compliance mechanism: energy-intensive sectors must meet sector-specific intensity targets; over-performers earn CCCs, under-performers buy them.
- Offset mechanism: sectors without obligations, such as agriculture and afforestation, may join voluntarily to generate and trade credits.
- Importance: helps meet the NDC aim of a 45% cut in emission intensity by 2030, and encourages clean technology, carbon capture and private participation.
About carbon pricing
- An economic tool that makes polluters bear a cost for emissions, signalling firms to cut emissions or invest in green technology.
- Emissions Trading System: cap-and-trade (capped emissions, tradable allowances) or baseline-and-credit (low emitters sell credits).
- Carbon tax: a fixed price per tonne of CO2 emitted.
- Crediting mechanism: project-based reductions create tradable credits.
Concerns
- Targets need to weigh ambition against what industry can deliver, or CCC value gets distorted.
- In PAT, more than half the certificates were never traded and penalties were not enforced.
- Late credit issuance hurts market confidence.
- Gaps in monitoring, reporting and verification (MRV) weaken credibility.
- Double counting is a risk, especially in international trade.
Governance set-up
- Mission LiFE: global mission for sustainable living, aiming to mobilise 1 billion people by 2028.
- Green Credit Program: voluntary market that rewards tree plantation on degraded forest land based on verified reforestation.
- NSCICM: National Steering Committee for Indian Carbon Market, the apex body for rules, targets and governance.
- BEE: Bureau of Energy Efficiency, set up in 2002, implements carbon market and energy efficiency norms.
Exam angle
- One CCC = one tonne of CO2 equivalent.
- CCTS replaces the PAT scheme; apex body: NSCICM.
- A 2023 UPSC Prelims question tested carbon markets: the answer was that both statements are correct but the second does not explain the first.