India's Path to a Regulated Domestic Carbon Market: Insights from IETA

Government officials in India are set to establish regulations for a domestic carbon market inspired by international models. Dirk Forrister, President and CEO of IETA, highlighted pending details and the balance between power needs and investments in renewables. The initiative aims to draw foreign investments and improve emissions reduction.

Government officials are expected to set up regulations for the domestic carbon market in the coming months, having examined models in Europe and green-conscious countries, Dirk Forrister, President and CEO of the International Emission Trading Association (IETA), said on Wednesday.

''We are waiting for details as to what the targets would look like, and what flexibility will be affordable,'' he told PTI regarding the progress of India's carbon market development. When asked to estimate the Indian carbon market size, he said, ''We can't estimate just yet because the details are still being produced by the Indian government.''

''On the demand side, the strength of the market is to be set by regulations. We don't know how tough they are but they will be coming out in the coming months and not years away.'' India has enormous power needs and interests in bringing existing infrastructure but is also working to attract more investments in renewables and energy efficiency programmes, he noted, acknowledging the challenge for the government to balance its enormous needs to supply power to every Indian. It aims to build on the ''Perform, Achieve and Trade'' programme to evolve into a serious carbon market, covering several sectors like heavy industries, including power, chemicals, fertilisers, and steel, among others.

Forrister, who was in India earlier this week, said the Indian officials have been examining models in Europe, Chile, Colombia, California, and South Africa, among other places, while participating in study programmes from the World Bank and the Asian Development Bank. He also noted that large Indian corporations with global assets are committed to working on reducing emissions. ''Large Indian corporations are focused on this carbon market development in India, especially as their European customers demand cleaner products,'' he said.

He noted that the government has identified target areas for foreign investments and would consider approving carbon credits for exports into international markets. ''India faces a significant challenge in the carbon markets, which is why they seek to attract investments. The technologies are more expensive and may not be immediately required domestically,'' said Forrister, who had compared notes with government officials and business executives while in India. He emphasized India's enormous potential to reduce carbon emissions, both naturally and in industrial production, and to improve electricity generation at the launch of the Singapore Carbon Market Alliance (SCMA) at the Bloomberg Sustainable Business Summit 2024 in the city-state on Wednesday.

(With inputs from agencies.)