The Need for a Carbon Market in India, Kursk Incursion, Pradhan Mantri Jan Dhan Yojana (PMJDY) 10th Anniversary

(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.)

• As India progresses toward its ambitious development goals, the environmental impact of industrialization has become increasingly significant.
• The iron, steel, and aluminum sectors, among other energy-intensive industries, are major contributors to greenhouse gas emissions.
• With climate change posing a global challenge, there is a growing need for India to transition from energy efficiency targets (PAT Scheme) to emission reduction strategies(Cap and Trade).
• Establishing a robust carbon market is a critical step in this direction. This market-based mechanism can incentivize industries to reduce emissions while balancing economic growth and sustainability goals.

Concept and Differences: PAT Scheme vs. Emissions Trading –

Limitations India Faces in Implementing a Carbon Market –

1. Development vs. Climate Goals: India faces the challenge of balancing its development needs, such as industrialization and housing demand, with climate goals. Rapid urbanization and economic growth increase the need for industries like steel and aluminum, which are heavy emitters.
2. Technological Constraints: Transitioning to low-emission technologies requires substantial investment in research and development. Many Indian industries may lack access to the necessary technology and capital to meet strict emission targets.
3. Policy and Regulatory Challenges: India’s current policies, including the PAT scheme, focus on energy efficiency rather than absolute emission reductions. Developing a comprehensive carbon market framework that aligns with India’s Nationally Determined Contributions (NDCs) under the Paris Agreement poses regulatory and administrative challenges.
4. Global Market Dynamics: The international carbon market is dominated by established systems like the European Union Emissions Trading System (ETS). India’s unique socioeconomic context requires a tailored approach that may not align with global standards, making it difficult to integrate with international markets.
5. Economic Impact: The implementation of a carbon market could increase operational costs for industries, potentially affecting competitiveness and growth, especially in sectors critical to India’s economy.

Way Forward –

1. Phased Implementation: India can adopt a phased approach, starting with a voluntary carbon market and gradually transitioning to a compliance market. This allows industries to adapt to new regulations and technologies.
2. Technological Advancements: Investment in cleaner and more efficient technologies is crucial. Public-private partnerships, international collaboration, and access to global funds can help facilitate this transition.
3. Policy Alignment: Harmonizing the carbon market with existing schemes like PAT and ensuring coherence with India’s NDCs will make the transition smoother. Clear guidelines and regulatory frameworks are needed to ensure compliance and effectiveness.
4. Capacity Building: Enhancing the capacity of industries and regulatory bodies to monitor and report emissions accurately is essential for the success of the carbon market. Training programs and awareness campaigns can help in this regard.
5. International Collaboration: Engaging in global climate initiatives and learning from successful carbon markets can provide valuable insights. India should seek technical and financial support from international organizations to strengthen its carbon market.

By developing a carbon market tailored to its unique needs, India can strike a balance between its development priorities and its commitment to mitigating climate change, leading to a sustainable and resilient future.

• 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:

• 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.

• Ukraine launched a surprise ground incursion into Kursk, Russia bordering Ukraine, marking the first invasion of Russia or the former Soviet Union since World War II.

• The incursion serves multiple strategic purposes for Kyiv, including diverting Russian forces from ongoing offensives in the east and disrupting troop movements towards Kharkiv.
• Ukrainian President Volodymyr Zelenskyy stated the operation aimed to create a buffer zone to prevent further Russian artillery strikes from Kursk against Sumy.
• Initially downplaying the incursion, Moscow has intensified its operations elsewhere, particularly in Pokrovsk, a crucial logistics hub connecting Kyiv’s eastern frontlines.
• Russia has bolstered Kursk’s defence by redeploying forces from Kharkiv and made significant territorial gains in the Donetsk region, counterbalancing its losses in Kursk.
• Recently PM of India visited Ukraine, the first Indian PM to visit since its independence in 1991.

Dig Deeper: Read about Gazprom and Nord Stream in the context of Energy Security in Europe.

• The Ministry of Defence signed a repeat order for SIG 716 rifles from Sig Sauer, U.S., in June 2024.
• Earlier in 2019, the Army procured SIG 716 rifles under a fast-track contract and provided them to frontline troops in counter-insurgency operations.
• The SIG 716 rifle, weighing 3.82 kg with an effective range of 600 meters, has proven to be more capable and reliable than the indigenous INSAS (Indian National Small Arms System) rifles.
• Positive feedback from soldiers led to this follow-on order.
• The procurement is part of the Army’s long-standing efforts of modernisation.

Dig Deeper: Read about the SIPRI and top US Defence imports in India.

• The Prime Minister praised the Pradhan Mantri Jan Dhan Yojana (PMJDY) as it marked its 10th anniversary, highlighting its role in financial inclusion and empowerment, particularly for women and rural populations.
• Over 53 crore people now have bank accounts under the scheme.
• These accounts collectively hold a deposit balance exceeding ₹2.3 lakh crore.

Dig Deeper: Read about JAM Trinity and its role in the targeted delivery of subsidies.