GS-3: Environmental conservation; Environmental pollution and degradation; Environmental Impact Assessment

In News: Fair trade-India must develop a transparent carbon trade policy

1.Carbon markets offer a promising avenue for countries to accelerate climate action and achieve their emissions reduction goals. Discuss the potential benefits and challenges associated with carbon markets, particularly in the context of India. How can India effectively leverage carbon markets to balance its developmental aspirations with environmental sustainability?

Carbon markets, a mechanism for trading greenhouse gas emission reductions, offer a promising avenue for countries to accelerate their climate action.

Potential benefits:

1. Incentivizing emission reductions: Carbon markets promote cleaner technologies by allowing industries to trade carbon credits, leading to significant emissions reductions.
2. Economic opportunities: Establishing a carbon market creates economic prospects, particularly in renewable energy and forestry projects, aligning with India’s goal of generating half its electricity from non-fossil sources by 2030.
3. Alignment with global standards: Participation in carbon markets enhances India’s credibility and fosters international cooperation on climate action.
4. Job Creation: Investment in clean energy projects can create new jobs, especially in rural and semi-urban areas.
5. International Cooperation: Participation in carbon markets can foster international cooperation and knowledge sharing on climate change mitigation.
6. Support for hard-to-abate industries: Transitioning to a carbon market can help sectors like iron and steel meet emission intensity standards, promoting sustainable practices.

Challenges:

1. Verification and transparency issues: Ensuring robust verification mechanisms is crucial to maintain confidence in the integrity of carbon credits.
2. Market liquidity and pricing: Low carbon credit prices can disincentivize emissions reductions; adequate liquidity and a higher carbon price are essential for success.
3. Market volatility: Fluctuations in carbon prices can create uncertainty for investors and project developers.
4. Implementation capacity: Insufficient capacity for designing and implementing carbon pricing instruments poses significant hurdles.
5. Environmental integrity: Ensuring the environmental integrity of carbon credits is crucial to avoid “carbon leakage” and “double-counting” of emissions reductions.
6. Social Equity: It is essential to ensure that the benefits of carbon markets are distributed equitably, particularly to marginalised communities.

Leveraging carbon markets for developmental aspirations

1. Phased implementation: Gradually introduce carbon pricing to allow industries to adapt without economic shocks, providing a clear schedule for rate increases.
2. Setting ambitious targets: Establish stringent emission reduction targets that drive genuine progress, avoiding unambitious goal setting.
3. Enhancing data integrity: Implement robust data verification processes to ensure transparency and prevent fraud, with public access to data to build trust.
4. Engaging stakeholders: Foster participation from diverse stakeholders, including industries and civil society, for a comprehensive approach to implementation.
5. Technology transfer incentives: Encourage technology transfer and clean technology adoption, especially for small and medium enterprises (SMEs), to bridge the innovation gap in emissions reduction efforts.

Carbon markets present a valuable opportunity for India to achieve its climate goals while fostering economic growth. By addressing potential challenges, India can effectively leverage these markets to balance developmental aspirations with environmental sustainability.

PYQ

1. Should the pursuit of carbon credit and clean development mechanism set up under UNFCCC be maintained even though there has been a massive slide in the value of carbon credit? Discuss with respect to India’s energy needs for economic growth.2014

Source:

https://www.thehindu.com/opinion/editorial/%E2%80%8Bfair-trade-on-the-29th-cop-and-indias-carbon-market/article68796037.ece#:~:text=India%20must%20develop%20a%20transparent%20carbon%20trade%20policy&text=A%20specific%20section%20under%20the,among%20countries%20%E2%80%94can%20be%20operationalised.