A case for joining the global carbon coalition, Pg6

Key Highlights:

• On July 31, nearly 500 Indian companies submitted their first compliance reports under the national Carbon Credit Trading Scheme (CCTS), which became live with binding targets and penalties.
• The first carbon credits under CCTS are expected to be issued in October, with trading on power exchanges commencing between November and January.
• In May, the Open Coalition on Compliance Carbon Markets (OCCCM) was launched in Florence by the European Union, China, and Brazil, aiming to align global compliance carbon markets.
• Germany, New Zealand, Canada, France, Norway, Singapore, Türkiye, and the United Kingdom have joined the OCCCM, which adopted its first work plan in Wuhan on September 14.
• India has not yet joined the OCCCM, despite its own carbon market being operational.

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Detailed Insights:

• The Carbon Credit Trading Scheme (CCTS), operational since 2023, is designed to help India achieve its Nationally Determined Contribution (NDC) targets and the 2070 net-zero goal.
• The OCCCM is a collaborative platform for knowledge exchange on carbon pricing mechanisms, Monitoring, Reporting and Verification (MRV) systems, carbon accounting methodologies, and high-integrity offsets.
• India's participation in the OCCCM is crucial given the global proliferation of carbon pricing systems, which minimize mitigation costs and can generate fiscal revenues.
• Joining the coalition would better prepare India for the implications of "climate clubs" and mechanisms like the European Union's Carbon Border Adjustment Mechanism (CBAM).
• The CBAM, now operational, imposes a carbon price on imports into the EU, aiming to prevent carbon leakage and encourage global decarbonization.
• The OCCCM does not enforce mitigation targets but facilitates critical discussions and decisions on global carbon market alignment, making India's presence vital to shape future rules.
• Brazil, a founding member of OCCCM, and other developing countries are joining, which could offer comfort and strategic alignment for India.

Key Concepts Involved:

• Carbon Credit Trading Scheme (CCTS): India's national carbon market framework, established under the Energy Conservation Act, 2001 (amended 2022), to facilitate emissions reduction through tradable carbon credits.
• Open Coalition on Compliance Carbon Markets (OCCCM): An international initiative launched by the EU, China, and Brazil to foster technical alignment and interoperability among national compliance carbon markets.
• Carbon Border Adjustment Mechanism (CBAM): An EU import duty on carbon-intensive goods produced outside the EU, designed to prevent carbon leakage and ensure fair competition.
• Nationally Determined Contributions (NDCs): Climate action plans submitted by countries under the Paris Agreement, outlining their efforts to reduce emissions and adapt to climate change.
• Net-Zero Goal: Achieving a balance between anthropogenic greenhouse gas emissions and their removal from the atmosphere over a specified period.