Context: Recently, the government of India and the Bureau of Energy Efficiency have announced India’s Carbon Credit Trading Scheme (CCTS) 2023, referred to as the Principal Scheme.

About Carbon Credit Trading Scheme (CCTS)

• Aim: To create a domestic carbon market, encouraging industries and entities to reduce their carbon emissions through a market-based approach.

• It will include both carbon reduction and carbon dioxide removal (CDR) projects.

• It will encourage companies to use clean technologies and shift to low-carbon practices.

• Obligated organizations and businesses will be provided with emissions reduction targets within the compliance mechanism.

• Each ton of reduced or avoided carbon emissions earns a carbon credit.

• Companies exceeding targets get rewarded with carbon credit certificates, but those falling short must buy certificates or face penalties.

• Non-obligated entities will be free to seek Carbon Credit Certificates by registering projects for removal, reduction, or avoidance in the offset mechanism.

• It builds on the existing Perform, Achieve, and Trade (PAT) framework, focusing on Green House Gas (GHG) emission reduction.

About Indian Carbon Market (ICM)

• The government has planned to develop the Indian Carbon Market (ICM) where a national framework will be established to decarbonise the Indian economy.

• It will be done by pricing the GHG emission through trading of the Carbon Credit Certificates.

• The Bureau of Energy Efficiency, Ministry of Power, and Ministry of Environment, Forest & Climate Change are developing the Carbon Credit Trading Scheme for this purpose.

• ICM will develop methodologies for the estimation of carbon emissions reductions and removals from various registered projects.

• It will stipulate the required validation, registration, verification, and issuance processes to operationalize the scheme.

• Monitoring, Reporting, and Verification (MRV) guidelines for the emissions scheme will be developed after consultation.

• It will mobilize new mitigation opportunities through demand for emission credits by private and public entities.

About Green Credits Programme

• It was launched by the Environment Ministry to create a market-based incentive for different kinds of environment-positive actions and carbon emission reductions.

• Alongside the CCTS, the Indian government has also introduced the ‘Draft Green Credit Programme Implementation Rules, 2023’.

• It extends its focus beyond greenhouse gas emissions reduction or removal, encompassing activities such as tree plantation, water conservation, sustainable agriculture, etc.