Emission Reduction Compliance Mechanism

Prelims | Current Events of National Importance

Mains (GS III) | Environmental Pollution & Degradation

Why in News?

The environment ministry has issued a draft notification proposing GHG emission intensity (GEI) reduction target under Carbon Credit Trading Scheme (CCTS), 2023.

• All traditionally high-emission industries in India such as aluminum, cement and pulp & paper are obligated to reduce their greenhouse gas (GHG) emissions to meet specific targets.
• Compliance mechanism under - Carbon Credit Trading Scheme, 2023.
• Notification - Industries have to reduce GEI within a specified time-period.
• If industries do not meet their GEI targets by reducing emissions for the respective compliance year, they will have to purchase carbon credit certificates from the Indian carbon market.
• In case an obligated entity fails to comply with the GEI target or fails to submit the carbon credit certificates equivalent to the shortfall for compliance, the Central Pollution Control Board (CPCB) will impose ‘environmental compensation’ (penalty) for the shortfall.
• The penalty will be equal to twice of the average price at which the carbon credit certificate is traded during the trading cycle of that compliance year.
• The average price will be determined by the Bureau of Energy Efficiency (BEE), which has finalized detailed procedures to fix GEI targets (in tonnes of carbon dioxide equivalent) for each of the high emission sectors from the 2023-24 baseline year.
• Environmental Compensation shall be paid within the 90 days from the day of such imposition.
• The targets are in sync with the country’s ‘net zero’ emission goal of 2070 and will contribute to meet its Nationally Determined Contribution (NDCs) climate action targets.
• It is expected that the move may also make these industries ready to face the European Union’s proposed Carbon Border Adjustment Mechanism (CBAM), which is to be implemented from next year.
• The CBAM is a tool to put a price through imposing border tax on carbon intensive goods, like iron & steel, aluminium and cement.
• India has, however, strongly opposed the EU’s move as it will put a tariff burden on such products of developing countries and impact their trade.

References

1. MSN | Emission intensity reduction targets
2. Energetica | Draft GEI target Rules