India’s carbon market to be launched in 2026, says power minister

New Delhi: India’s much-anticipated carbon market is likely to be launched by 2026, said Union power minister Manohar Lal.

It would be crucial for Indian industry, especially for exporters as they need to comply with global norms to curb carbon emission, the minister said on Friday.

Companies in sectors such as steel and cement sectors have been concerned of the impact of European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on carbon-intensive products. Carbon credits would push manufacturing companies towards green power and lower carbon emissions, which would increase their compliance for exports to countries in the EU.

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Stakeholders have been waiting for the launch of the carbon market after the parliament had in 2022 paved the way for setting these up with the passage of the Energy Conservation (Amendment) Bill, 2022. Carbon markets are trading systems in which carbon credits are sold and bought.

“Very soon we are going to launch an independent carbon market of our country…Likely by mid of 2026. Under this programme, one who uses fossil fuel or emits carbon would have to buy carbon credits and those who would use power from non-fossil sources would have carbon credits which they call sell in the market. So, the market for sale and purchase of carbon credits, which is not there in our country now, will be launched in 2026,” the minister said.

He added, “Through this our industries will also be able to grow as several countries have decided that in coming years, they would import only the products made through power from non-fossil sources and we will export only those products.”

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Noting that the industry needs to ensure that they go more towards non-fossil sources of power, the Union minister said the government is preparing the industry for the carbon market.

Carbon markets are trading systems where carbon credits are sold and bought. Companies or individuals can use carbon markets to compensate for their greenhouse gas emissions by purchasing carbon credits from entities that have reduced their greenhouse gas emissions and have higher credits. All the three power exchanges in the country—Indian Energy Exchange Ltd, Power Exchange India Ltd and Hindustan Power Exchange Ltd—are expected to develop their own carbon-credit trading platforms.

Adani discom gets highest rating

During the press conference, the power ministry also launched ratings of discoms across the country. Adani Electricity Mumbai Ltd emerged the top discom with a score of 99.8, followed by Gujarat’s Dakshin Gujarat Vij Company Ltd in the second spot. The rankings are based on several parameters including financial sustainability and performance parameters like billing efficiency, collection efficiency and distribution losses.

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