Carbon Credit Trade is Empowering Energy Conservation in India

India is moving progressively towards energy conservation over the years that have benefitted it to trade carbon credits with other parts of the globe. The global carbon credit market has increased more than 160% in the previous fiscal year and is expected to touch the mark of US$ 100 billion by 2030 a year marking many other important deadlines such as Sustainable Development Goals, etc.

But in the wake of the Conference of Parties (COP) framework regarding the trade of carbon credit outside the country will now not be considered under the commitment of Nationally Determined Contributions (NDCs) of the originating country. India thus is making provisions to develop the domestic carbon market through the recent amendments in the Energy Conservation Act, 2001.

The Energy Conservation (Amendment) Bill, 2022 has set clear objectives for energy conservation and carbon trading in India. These mandatory provisions regarding energy conservation will lead the way for the fulfillment of India’s commitment to energy security for the long-term vision of a clean and green India.

The provisions like specifying the minimum share of consumption of non-fossil energy sources by specified consumers and covering the large residential buildings/offices with a connected load of 100 KW or above within the energy conservation regime along with the provision of a dedicated scheme to govern carbon credit trade in India.

In its updated NDC India plans to achieve net-zero emissions by 2070. So this bill by the Ministry of Power will be in line with “India’s Long-Term Low-Carbon Development Strategy” submitted by the Ministry of Environment, Forest, and Climate Change (MOEF&CC) at the UNFCCC. This will simultaneously aim to strengthen India’s energy grid by expanding energy generation through renewable sources.  

As per the estimates of the Central Electricity Authority (CEA), India’s non-fossil fuel-based energy generation capacity in proportion to the country’s total installed capacity is going to touch the mark of 64% by FY 2029-30 which accounts for nearly 42% till October 2022. The increased share will be achieved through these updated provisions and the right implementation of the long-term strategy related to low-carbon development. The carbon credit trading in the domestic market itself will address India’s energy security as a priority while combating climate change at the global level.