India will set carbon emission reduction targets for four fossil fuel dependent sectors, as the Asian country looks to align its industry with the country’s greenhouse emissions reduction target, two government officials said.
The country will fix carbon emission intensity benchmarks and reduction targets for three years for companies in petrochemicals, iron and steel, cement and pulp and paper, two government officials, who did not want to be named, told Reuters. The market trading cycle will be annual, they said.
The companies in the four sectors are also likely to be the first ones to trade on the country’s carbon trading market from April 2025, the officials added, which will enable them buy and sell carbon credits to met their goals.
ADVERTISEMENT
Companies which exceed their targets earn carbon credits that can be sold to firms which fall short of their goals.
“The mandates will be applicable from 2024-25 and the (carbon) trade will start in 2025-26,” one top government official said.
The targets will be aligned with the country’s emission intensity – the total amount of greenhouse gas emissions emitted for every unit increase of gross domestic product (GDP) – reduction goals submitted to the United Nations, the officials said.
India has committed to cutting its ratio of greenhouse emissions to gross domestic product by 2030 to 45% of its 2005 level and to net zero by 2070.
ADVERTISEMENT
The carbon credits will be traded on the proposed carbon market provided under a legislation cleared by the Indian Parliament in December last year.
India’s ministries of environment and power did not respond to a query from Reuters.
The proposed Indian carbon market is different from those created in developed countries as they set a limit on emissions and then allocate tradable permits, or credits, to emitter industries.
ADVERTISEMENT
The targets for reducing each sector’s emissions are being set by a committee comprising of key ministries such as environment, power and renewable energy.
The rules and targets for the industries are likely to be announced before December, the two officials said.
India already has a market for trading certificates in above-target energy savings for entities in 13 sectors.
Green energy companies formed a group in October to mediate between the government and industry. They included Adani Green, owned by billionaire Gautam Adani, Hero Future Energies, Ayana Renewable Power and global private equity major KKR’s Virescent Infra.