There are signs of the market for carbon credits in India maturing. The national commodity exchange, NCDEX, has just announced the launch of futures contracts in carbon credits, or CERs, while its competitor—MCX—did the same in January. Trading on these exchanges will encourage greater commercial engagement with climate change. India is already a leader in CDM projects—the route for developed countries to meet their emission requirements. But, it seemed to be, of late, losing out to other Asian countries including China. One reason for this was the perception of higher price expectations among Indian firms while negotiating with companies from the West. Price discovery should become easier.
All the more reason that accounting norms for carbon credits are put in place soon. Our CDM projects are skewed towards small, renewable energy-based projects. Clarity on accounting will widen the market.