- The finance minister announced in the budget that regulations will shift from the ‘Perform, Achieve, and Trade’ (PAT) mode to the ‘Indian Carbon Market’ mode.
- PAT vs. Emissions Trading:
| PAT (Perform, Achieve, and Trade) | Emissions Trading (Cap and Trade) |
| A regulatory tool designed to reduce specific energy consumption in energy-intensive industries. | A market-based approach to control pollution by setting emission caps. |
| Focus on energy efficiency, where firms earn credits for meeting standards, which they can trade. | Focus on absolute emission ceilings and not based on relative energy efficiency standards. |
- India joined the Clean Development Mechanism under the Kyoto Protocol and became a leading supplier of Certified Emission Reduction Units.
- India’s Nationally Determined Contributions (NDC) include reducing the emissions intensity of its GDP by 45% from 2005 levels by 2030 and achieving 50% non-fossil fuel power capacity by 2030 under the Paris Agreement.
- India’s version of a carbon market may differ from the European Union’s Emissions Trading System (ETS) to align with its development priorities.
- The 2021 draft by the Bureau of Energy Efficiency proposes a two-phase approach:
- A voluntary market supported by a domestic carbon offset mechanism.
- A compliance market with mandatory participation, including industries like iron, steel, petrochemicals, and aluminium.
- The domestic carbon credits trading scheme is expected to launch by 2026.
Dig Deeper: Read about the Paris Agreement Crediting mechanism.
