The COP29 conference is scheduled to take place in Baku, Azerbaijan, next month. According to Manish Dabkara, CMD of EKI Energy Services, expectations for the conference are centered on obtaining clearer guidelines, especially for the carbon market community. Although several articles of the Paris Agreement still require full negotiation among parties, there is hope for more concrete direction on key aspects. Two areas, in particular, are of interest:
- Article 6.2 of the Paris Agreement: This article facilitates partnerships between two countries, allowing them to help each other reduce emissions through the exchange of carbon credits or emission reductions. Dabkara notes that India is working on 14 technologies in sectors such as renewable energy, green hydrogen, and clean cooking, which could benefit from such international collaborations. The carbon credits generated through these partnerships would be split between the nations involved, potentially boosting employment, technological exchange, and funding.
- Article 6.4 of the Paris Agreement: This section expands on a broader carbon credit market, where industrialised nations commit to purchasing credits from developing countries to meet their net-zero goals. Dabkara highlights that clear methodologies, registration, and verification guidelines would be pivotal in building a more efficient and large-scale market, benefiting both India and the voluntary carbon market.
Private Sector
Article 6 of the Paris Agreement plays a crucial role in encouraging private sector participation in international carbon markets. According to Dabkara, the framework allows companies to invest in emission reduction projects across borders, supporting nations in meeting their emission reduction targets. India has identified 14 key technologies that could attract private sector investments, especially in sectors like renewable energy and green ammonia.The private sector’s role is pivotal in mobilising funds, supporting technology deployment, and creating emission-reducing projects. Companies can earn carbon credits under Article 6.2, creating an additional incentive for their involvement. Dabkara stresses that this private sector engagement helps high-emission countries, such as the EU and the US, achieve their net-zero targets more cost-effectively. Furthermore, private sector participation enhances the credibility of both compliance and voluntary carbon markets, contributing to broader environmental goals, including the Sustainable Development Goals (SDGs).
Carbon Market
For an effective carbon market to emerge in India, clear targets are essential, according to Dabkara. At present, the government has yet to finalise the list of obligated entities across nine different sectors, a crucial step for the compliance carbon market’s first phase. By establishing these targets, the market could become more organised and transparent. Furthermore, Dabkara suggests expanding the sectors covered by the carbon market in the future to keep businesses aligned with long-term emission reduction requirements.Market health would also rely on ensuring the trading rates for carbon credits are viable for sellers. This would encourage investment in emission-reducing activities such as renewable energy projects. Dabkara emphasises that penalties for non-compliance would ensure buyers meet their targets, driving market efficiency. Additionally, engaging traders, brokers, and speculators in the market would help provide liquidity and stability. The involvement of non-obligated entities, such as private companies, could also help establish a robust carbon market.
Net-Zero Target
India has already made significant strides toward its net-zero goals, according to Dabkara. Prior to the Paris Agreement, India had implemented policies like the Renewable Purchase Obligation Act and the Perform, Achieve, and Trade (PAT) mechanism, both of which set emission reduction targets for major emitters.Since setting the net-zero target for 2070, India has continued to enhance its climate policies. Dabkara highlights that in 2022, the Energy Conservation Act was amended to include a Carbon Credit Trading Scheme (CCTS), which mirrors the systems in the EU and Korea. This market-based mechanism is expected to significantly support India’s emission reduction goals. Additionally, India has launched a voluntary carbon market for non-obligated entities, including businesses in the service sector, which enables these companies to demonstrate their commitment to reducing emissions.Alongside these efforts, the government is working on programmes like ECOMARK, which helps consumers make environmentally conscious purchasing decisions based on product carbon footprints, and the Extended Producer Responsibility (EPR) rules, which promote recycling. All these initiatives, combined with efforts to increase renewable energy, reduce GDP emission intensity, and enhance forest cover, put India on track to meet its Nationally Determined Contributions (NDCs) well ahead of the 2070 target.
Circular Economy
Recycling plays a vital role in India’s climate policies, particularly through the Extended Producer Responsibility (EPR) rules, which cover various sectors, including e-waste, plastic waste, tire recycling, and the reuse of materials such as oil and steel in the automobile industry. Dabkara notes that these circular economy initiatives are essential for achieving India’s broader climate goals.Another key initiative is India’s Green Credit Programme, which trades ecosystem services such as water conservation, air quality improvement, and sustainable agriculture. This program aligns with India’s broader LIFE (Lifestyle for Environment) mission, which encourages citizens to adopt sustainable lifestyles to help meet national climate objectives.These initiatives, along with the introduction of new trading mechanisms for ecosystem services, are reshaping India’s approach to climate action and supporting the country’s progress toward its climate targets.
