Global Carbon Market
Title: Global Carbon Market
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Lead executing agency: Ministry of Environment, Forests and Climate Change
Overall term: 2015 to 2021
Although India has comparatively low per capita emissions of 1.4 tonnes of greenhouse gas (GHG) emissions per year, it is still the world's third highest contributor, amounting to about 6.5 per cent of global CO2 emissions. If India’s CO2 emissions continue to grow as they have over the past 10 years, they would surpass the current EU-28 emissions by 2020. India ratified the Paris Agreement and has put forward ambitious targets for Nationally Determined Contributions (NDC). The Indian NDC has set a target of generating 40 per cent of electric power from non-fossil fuel-based energy resources by 2030. It also has a target of creating an additional carbon sink of 2.5 to 3 billion tCO2e from additional forest and tree cover by 2030.
The national policy framework includes raising awareness on climate change. Moreover, India aims to achieve the co-benefits of addressing climate change that will lead to additional economic growth. Currently, addressing these issues adds significantly to public spending. Past experiences under the Clean Development Mechanism (CDM); one of the market mechanisms under the Kyoto Protocol, had facilitated investments of about 1.6 trillion Indian rupees (about 24.6 billion US dollars) in the country through climate mitigation projects in different sectors. Hence, within the array of choices that India has for implementing its mitigation targets, the role of market mechanisms will be advantageous not only to meet the targets but, also to finance them.
The activities and impacts of the "Global Carbon Market" project in India are closely aligned with the National Action Plan on Climate Change (NAPCC) and the targets under Nationally Determined Contributions (NDC). Moreover, there are already some national approaches, e.g. the energy efficiency trading system "Perform, Achieve and Trade" (PAT) or Renewable Energy Certificate (REC) Mechanism, whose integration into future New Market Mechanisms (NMMs) would be desirable.
Decision makers of the public as well as the private sector use existing and new market-based climate change mitigation tools to implement Nationally Determined Contributions.
The project supports the Ministry of Environment, Forest and Climate Change in using existing and new carbon market instruments for implementing the national climate change action plan and the nationally determined contributions. The project is supporting public and private decision makers on discussions and engagements on Article 6 of the Paris Agreement along with strategic development of new instruments.
The project advises and builds the capacities of government agencies and private sector actors on the potential benefits of the carbon market, including the use of new market mechanisms and carbon pricing approaches. In addition, through studies and pilot activities, the project provides inputs for potential mechanisms that could be developed as per Article 6 of the Paris Agreement.
By providing advice and support to its partners through analyses, feasibility studies, dialog forums, specialist events and capacity development support, the project contributes to the discussion and development of market mechanisms in India under Article 6 of the Paris Agreement. Besides, the project forms strategic alliances with other actors in India on carbon markets like the World Bank TERI (The Energy Resources Institute); EESL (Energy Efficiency Services Limited); World Resources Institute (WRI) on private sector engagement, amongst others.
The project has built capacities and provided training for public and private sector actors on market mechanisms, climate finance instruments and carbon pricing approaches. The project has also supported the political partner in understanding various components of Article 6 of the Paris Agreement through studies on evolving aspects of the carbon market approaches, dialogue forums, stakeholder consultations, feasibility studies and market analyses needed for decision making.