EMISSIONS TRADING SCHEME

  • After the passing of the Energy Conservation (Amendment) Bill last December, the Centre is now in the final stages of notifying an Emissions Trading Scheme (ETS) that will require polluting industries to achieve certain standards of energy efficiency and permit them to ‘trade’ these improvements.
  • The notification specifying which sectors will be covered and the targets they will be set will be announced latest by June, two officials, affiliated to the Power and Environment Ministries, separately confirmed to The Hindu on condition of anonymity.
  • The Bureau of Energy Efficiency (BEE), a Power Ministry body, would be the nodal coordinator of the scheme.
  • Sectors (for example, aluminium, cement, fertilizer) would be given energy efficiency targets and the companies that were able to exceed these targets would get ‘credits’ or certificates that they could bank or sell to companies that failed to meet the targets.
  • Emissions trading schemes, as they are called, are deployed in the European Union and Korea.
  • Since 2015, the BEE has been running the ‘Perform, Achieve, Trade’ scheme under which 1,078 industries spanning 13 sectors have been getting energy security certificates if they exceeded certain targets.
  • While similar in principle, the credits generated under the forthcoming mechanism will force companies to invest substantially more in deploying alternative, cleaner sources of energy to meet efficiency norms, as they will likely have to meet a higher bar for emission reductions.

Policy difference

  • One official said that one significant difference in the Indian emissions trading scheme from the ones in Europe or other countries is that companies will not be required to cut carbon emissions in absolute terms.
  • The EU is required to cut emissions under the provisions of the United Nations Framework Convention on Climate Change.
  • India doesn’t have an obligation. However, we have committed to reducing the emissions intensity (emissions per unit of GDP) of our GDP by 45% (of 2005 levels) by 2030.
  • So it’s possible for companies (under the Indian emissions trading scheme) when they increase production to emit more carbon and still be more efficient,” the official said.
  • India has committed to installing facilities to generate nearly 500 GW of electricity from non-fossil sources by 2030 and this will cost at least ₹2.4 trillion according to an estimate from the Central Electricity Authority.
  • “India should have its own emissions trading scheme structure and while we can certainly learn from models in the West, we should ensure that what we do accommodates for our specific needs

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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