India may announce details of national carbon market scheme in June: official

India is on course to announce the details of a national carbon market scheme in June, with each element of the market to be consulted and finalized before trading could start by 2025, Abhay Bakre, director general of the Bureau of Energy Efficiency, told S&P Global Commodity Insights March 16.

BEE, an arm of India's power ministry, released a draft blueprint for stakeholder consultation on the market in 2021, proposing a phased introduction of a domestic carbon market for both compliance and offset participants.

"We will notify the Carbon Credits Trading Scheme possibly in June," Bakre said. "The scheme will define the institutional framework and as we move ahead there will be different elements of the market that will be consulted and rolled out."

Market elements include a registry, a platform, the verifier, the exchange and an administrator, according to Bakre.

Each of these would be consulted on with respective stakeholders, during which process functions would be defined.

"Each element will be launched as they are ready and after projects are registered; Carbon Credit Certificates are expected to be available for trading by 2025," Bakre said.

Complex consultations this year and next will involve government officials, state-run and private companies, a government official close to the drafting process told S&P Global.

"The categories of stakeholders are vast -- from waste-to-energy to steel and cement, with many wider issues to be discussed," said the official, who asked not to be named.

Other aspects of the mechanism, notably a market stabilization fund and integration of existing Renewable Energy Certificates and Energy Saving Certificates into Carbon Credit Certificates, would also be finalized in the run-up to 2025, the official said.

RECs and EScerts currently trade on India's power exchanges under a Perform-Achieve-Trade mechanism and renewable energy purchase obligation program for designated sectors such as power, cement and steel to curtail emissions.

Prices

Another crucial part of the market would be the setting of emission caps for the highest emitting sectors in the compliance scheme.

Some 11 sectors have been defined under the proposed compliance market including aluminium, cement, chlor alkali, petrochemicals, thermal power plants and petroleum refineries.

"Following the implementation of a carbon market in India, we forecast India carbon prices to rise towards $80/mtCO2e by 2050 under our inflection's climate scenario," S&P Global said in a late January analysis.

"This bullish long term price signal is driven by development and extension of India's carbon market to more of its economy," it said.

India is a significant exporter of carbon credits. It issued 278 million credits in the voluntary carbon markets between 2010 and 2022, accounting for 17% of global supply, according to analysis by S&P Global.

India has a 2070 net-zero target. Its updated Nationally Determined Contribution (NDC) aims to lower its greenhouse gas emissions intensity per GDP by 45% by 2030 relative to 2005 levels.

Platts, part of S&P Global Commodity Insights, assessed the CEC price -- which reflects CORSIA eligible carbon credits -- at $2.50/mtCO2e on March16, up 1.6% month on month.

The Platts CNC, reflecting the most competitive nature-based carbon credits that either avoid or remove GHG emissions, was assessed at $2.2/mtCO2e, down 10% month on month.