The Centre for Science and Environment (CSE) has released a detailed report titled “The Indian Carbon Market: Pathways towards an effective mechanism.” This report provides a comprehensive roadmap for the successful implementation of India’s upcoming carbon market. Here are some key highlights:

Transition from PAT to ICM

The report discusses the transition from the existing Perform, Achieve and Trade (PAT) scheme to the Indian Carbon Market (ICM). The PAT scheme, while well-intentioned, faced several challenges in implementation, leading to only marginal emissions reductions. The ICM aims to address these issues and accelerate emissions reduction, especially in hard-to-abate sectors.

Key Recommendations

CSE’s report emphasizes several critical factors for the success of the ICM:

• Broad Coverage: The report emphasizes the need for a single, nationwide carbon market scheme covering all carbon-intensive sectors to ensure a comprehensive impact. This approach helps in effective implementation and avoid complexity.
• High Carbon Price: Setting a high carbon price is essential to drive significant emissions reductions.
• Data Integrity and Transparency: Ensuring accurate data and transparent processes will be crucial for the market’s credibility and effectiveness.
• Ambitious Targets: Avoiding unambitious targets is vital to prevent the accumulation of surplus carbon credits and ensure meaningful progress.

Learning from Global Examples

The report draws lessons from existing emission trading schemes (ETS) worldwide, including those in the European Union, South Korea, and China. By analyzing both the successes and shortcomings of these schemes, CSE provides valuable insights that can help shape the design and implementation of the ICM.

The Road Ahead

As India prepares to launch its carbon market, CSE suggests adoption of these recommendations to create an effective and robust mechanism. According to see  ICM represents a significant opportunity for India to lead in the global fight against climate change, aligning with its Nationally Determined Contribution targets under the 2015 Paris Agreement and its long-term vision for a sustainable future.

The launch of India’s national carbon market represents a significant milestone in the country’s journey towards decarbonization. By incorporating the recommendations from CSE’s report, India can create a robust and effective carbon market that not only meets its climate goals but also sets an example for other developing nations.

As CSE Director General Sunita Narain aptly put it, "The upcoming Indian Carbon Market scheme should kick off with a large coverage of the country’s emissions. For this scheme to be effective, it also needs to ensure a high carbon price, data integrity, and transparency"

Click here to Download CSE's Report, "The Indian Carbon Market: Pathways towards an effective mechanism"