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India Launches Domestic Carbon Credit Trading Exchange Under Energy Conservation Act
The Bureau of Energy Efficiency operationalizes the Indian Carbon Market, enabling obligated entities to trade carbon credits on a dedicated exchange platform.
India has officially launched its domestic Carbon Credit Trading Scheme (CCTS) under the Energy Conservation (Amendment) Act, 2022, marking a significant step in the country's climate change mitigation strategy. The Bureau of Energy Efficiency (BEE), under the Ministry of Power, will serve as the regulatory authority for the Indian Carbon Market (ICM).
Market structure
The ICM will operate through a designated exchange platform, initially hosted on the National Commodity & Derivatives Exchange (NCDEX). Obligated entities — primarily large industrial consumers — will be assigned carbon emission intensity targets. Those exceeding their targets can purchase credits from entities that have reduced emissions below their allocated thresholds.
Pricing mechanism
Initial carbon credit prices are expected to range between ₹800-1,200 per tonne of CO2 equivalent, based on feasibility assessments conducted by the BEE. The price is expected to increase progressively as emission intensity targets are tightened.
Legal framework
The scheme draws its legal authority from Sections 14A and 14B of the EC Act, which empower the Central Government to establish carbon trading mechanisms and impose penalties for non-compliance.
International implications
India's carbon market is designed to be interoperable with international frameworks, potentially enabling cross-border credit trading under Article 6 of the Paris Agreement in future phases.
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