The power ministry on Monday issued a draft carbon credits trading scheme as part of its process to establish a carbon credit market in India and sought views from stakeholders on the proposals by April 14. The Energy Conservation Amendment Bill, passed by Parliament in December, included provisions for a market for carbon credit.
The proposed Energy Conservation (Amendment) Bill, 2022, which was passed by the Indian Parliament, empowers the Central Government to specify a Carbon Trading Scheme in consultation with the Bureau of Energy Efficiency (BEE). The ministry is currently finalizing the Carbon Credit Trading Scheme (CCTS).
The scheme outlines that an ‘Accredited Carbon Verifier’ is an agency accredited by the BEE to carry out validation or verification activities in relation to the CCTS. Carbon credit trading aims to reduce carbon emissions and address climate change. The ‘Carbon Credit Certificate’ (CCC) is the certificate issued to the registered entity by the central government, or any authorized agency, in the CCTS. Each certificate issued represents the reduction or removal of one tonne of CO2 equivalent (tCO2e).
The draft proposes that the Indian Carbon Market Governing Board (ICMGB) would oversee the Indian Carbon Market (ICM), comprising members from various relevant central ministries and agencies.
The ICMGB will comprise members from the Ministry of Environment, Forest and Climate Change and Secretary, Ministry of Power; Ministry of Finance; NITI Aayog; Ministry of Power; Ministry of Environment, Forest and Climate Change; Ministry of New and Renewable Energy; Ministry of Steel; Ministry of Coal; Ministry of Petroleum and Natural Gas; Central Electricity Authority; Grid Controller of India; and Bureau of Energy Efficiency.
Further, the ICMGB will recommend procedures, rules, and methodologies for the functioning of the ICM, including a voluntary mechanism. It will also recommend guidelines for the sale of carbon credit certificates (CCC) outside India, approve projects and recommend the issuance of carbon credit certificates, and oversee administrative and regulatory functions.
Additionally, it may constitute committees or working groups and perform other functions assigned by the Central Government.
The Bureau will serve as the administrator for the ICM and act as the secretariat for ICMGB. Its responsibilities include developing standards and processes for registering projects under the voluntary mechanism, issuing carbon credit certificates, and developing market stability mechanisms.
The Bureau will also recommend charges for ICMGB approval, develop the process for crediting period/renewal/retirement of CCC, undertake capacity-building activities, maintain the IT infrastructure, and coordinate committees and working groups.
The Grid Controller of India will serve as the registry for the ICM, responsible for registering obligated and non-obligated entities, maintaining transaction records, and sharing them with the ICM administrator and Power Exchanges. The registry will also assist in developing the IT platform for maintaining the database of Carbon Credit Certificates, establishing linkages with other registries, and performing other functions assigned by the ICMGB or the administrator.
The Central Electricity Regulatory Commission (CERC) would regulate the trading activities under the ICM. It would also regulate the trading of CCCs, safeguarding the interests of buyers and sellers, regulating trading frequency, providing market oversight, and taking corrective actions to prevent fraud or mistrust. The Commission would also approve the participation of power exchanges for ICM trading, and the power exchanges must seek approval for their bylaws and rules from the Commission. The power exchanges will perform functions related to the trading of CCCs as per the Commission’s regulations.
The Bureau is responsible for constituting technical committees for different areas and sectors as required under either the compliance or voluntary mechanism of the Carbon Credit Trading Program.
Each committee would be chaired by a member with the requisite knowledge for the specified area and would consist of other members as required.
The Bureau will also specify the procedures and eligibility criteria for the accreditation of agencies to function as accredited carbon verifiers and develop methodologies and detailed procedures for registering projects and issuing CCCs for different sectors, with the support of technical committees, and submit the same to ICMGB.
Procedure for operationalizing ICM
The procedures will include criteria for issuing CCCs, their validity, floor, and forbearance prices, submission requirements and formats, monitoring, reporting, verification, and other related matters for the compliance mechanism. The ICM Administrator may issue directions and orders to registered entities, with the approval of the Central Government, as deemed appropriate for implementing the program.