Fair trade: On the 29th COP and India’s carbon market
India must develop a transparent carbon trade policy
While carbon markets came into existence nearly two decades ago, they have been plagued by opacity and criticism that they only created the illusion of emission reductions. Although such markets have revived, confusion remains about how credits may be verified. There is optimism that Baku may see a final resolution of this problem and that the first legal credits may begin to be claimed by countries next year. India, due to its voluntary commitment to generate half its electricity from non-fossil energy sources by 2030, stands to gain as a host of several carbon-reduction projects. Additionally, there are also mushrooming private sector enterprises in India setting up innovative forestry projects that reportedly lock carbon and can be claimed as credits by multinational companies, traded through so-called voluntary carbon markets. India’s iron and steel industries are among the nine types of industries expected to meet emission intensity standards by 2025. By restricting the amount of carbon per unit of production, this will, depending on regulatory enforcement, formally kick-start India’s carbon market. However, this will invite complex calculations and, given the experience of a related energy-efficiency trading scheme, run the risk of not exerting enough pressure on companies to comply. While calculating carbon saved is a fraught exercise, India must aim, through its research institutions and authorities, to evolve a transparent and fair policy that is on a par with the best internationally.