New Delhi: The Union ministry of power has notified the much-anticipated carbon credit trading scheme.

The notification said the Centre will constitute a “National Steering Committee for the Indian carbon market" to govern and oversee the functions of the market. The secretary, ministry of power will be the ex-officio chairperson, while the secretary for the ministry of environment, forest and climate change will be the co-chairperson.

The committee will also have members from the ministries of finance, new and renewable energy, steel, coal and petroleum, and Niti Aayog among others. The steering committee will recommend the Bureau of Energy Efficiency for the formulation and finalisation of procedures for institutionalizing the Indian carbon market and formulation of greenhouse gas emission targets for “obligated entities".

The Central Electricity Regulatory Commission (CERC) has been mandated to regulate the market. It will register the power exchanges and approve the carbon credit certificate trading in the Indian carbon market from time to time. “The power exchange shall seek approval of the Commission for their respective bylaws and rules for trading of certificates in the power exchange. The power exchanges shall perform functions regarding trading of carbon credit certificates, in accordance with the regulations notified by the commission."

Further, BEE would constitute, technical committees for different areas as required under compliance mechanism for the purposes of this scheme.

The power ministry would decide on the sectors to be included under compliance mechanism of the Indian carbon market on the basis of the recommendations of BEE. The bureau would also develop the trajectory and targets for the entities under compliance mechanism.

Under the compliance mechanism, “the ministry of power, after duly considering the recommendations of Bureau and National Steering Committee for Indian carbon market, shall recommend the notification of greenhouse gases emission intensity targets to the ministry of environment, forest and climate change for notification under the Environment Protection Act, 1986".

Commenting on the development, Manish Dabkara, president, Carbon Market Association Of India said: “Taking a cue from its Paris Agreement commitment and chasing its NetZero goal, Government of India in consultation with the Bureau has released the Carbon Credit Trading Scheme (CCTS) for the institutionalisation and functioning of the Indian Carbon Market (ICM). It involves a process for compliance in which emission objectives will be established for specific industries and organisations, surpassing which they will receive credit certificates."

The ministry had rolled out the draft scheme in March.

According to experts, a carbon market would help as many leading Indian corporates have made commitments to become carbon-neutral and the market will provide flexibility to entities in hard-to-abate sectors and with high reduction costs to supplement their own reduction efforts with credits from the carbon market.

The market is expected incentivize entities with low reduction costs to reduce emissions beyond their mandate and trading in the carbon market could reduce the overall cost of emission reductions in India.

The focus on curbing carbon emission comes in the backdrop of the ambitious net zero target of India which it aims to achieve by 2070.

Meanwhile, World Bank’s board of executive directors has approved $1.5 billion in financing to accelerate India’s development of low-carbon energy.