The Bureau of Energy Efficiency (BEE) has introduced a detailed procedure for the compliance mechanism under the Indian Carbon Market (ICM). This procedure aims to help India meet its climate goals by managing greenhouse gas (GHG) emissions. It does so by creating a market where companies can trade carbon credits. These credits represent a reduction in emissions and can be bought or sold by companies to meet their emission targets.
The procedure starts with defining important terms. For example, “activity data” refers to the amount of fuel, energy, or materials used or produced that is relevant for calculating GHG emissions. “Baseline year” is the year used as a reference point for measuring and assessing GHG emissions. “Biogenic source of energy” includes energy from organic materials like biomass, which comes from agriculture, forestry, or organic waste.
The report then explains the compliance mechanism. The Ministry of Environment, Forest and Climate Change (MoEFCC) will set emission targets for companies. These targets are based on recommendations from the Ministry of Power and the Bureau of Energy Efficiency. Companies that reduce their emissions more than their targets will receive carbon credit certificates (CCCs). These certificates can be traded on a market, allowing companies that exceed their targets to sell their excess reductions to companies that need to meet their targets.
If a company fails to meet its target, it must surrender CCCs equal to the amount by which it exceeded its target. If the company does not have enough CCCs, it must buy more. This creates an incentive for companies to reduce their emissions and invest in cleaner technologies.
The procedure also outlines the process for setting and updating GHG emission intensity targets. The Bureau will develop a sectoral GHG emission intensity trajectory, which sets the path for emission reductions in different sectors. These trajectories will be reviewed and updated regularly. The targets for each company will be based on this trajectory and other factors like available technologies and their costs.
The report details the monitoring and reporting process. Companies must create a monitoring plan that outlines how they will measure and report their emissions. This plan includes identifying all possible emission sources and calculating total emissions. Emissions are then converted to carbon dioxide equivalent units to ensure consistency across different companies and sectors.
Verification and assessment are also important parts of the procedure. Independent assessors will verify the accuracy of the reported emissions and the companyโs performance against its targets. This ensures transparency and accountability in the carbon market.
The procedure describes the process for issuing and surrendering carbon credit certificates. If a company reduces its emissions more than its target, it will receive CCCs. These CCCs can be banked for future use or traded on the market. If a company fails to meet its target, it must surrender enough CCCs to cover the shortfall. If it does not have enough CCCs, it must purchase more from the market.
The report also covers the trading and banking of CCCs. Companies can trade CCCs on a market, allowing those that exceed their targets to sell their excess reductions to those that need to meet their targets. Companies can also bank CCCs for future use, providing flexibility in managing their emissions over time. The compliance mechanism under the Indian Carbon Market aims to create a structured and transparent way to manage and reduce GHG emissions. By setting clear targets, monitoring emissions, and creating a market for trading carbon credits, the procedure provides a pathway for India to achieve its climate goals while encouraging companies to invest in cleaner technologies.
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