EMISSION TRADING SCHEME - GOVERNMENT SCHEME
News: Centre
in final stages of notifying emissions trading scheme
What's in the news?
● After
the passing of the Energy Conservation (Amendment) Bill last December, the
Centre is now in the final stages of notifying an Emissions Trading Scheme
(ETS) that would require polluting industries to achieve certain standards of
energy efficiency and permit them to ‘trade’ these improvements.
● Emission
trading schemes were already deployed in the European Union and Korea.
Emission Trading Scheme:
● The
Emissions Trading Scheme (ETS) is a regulatory tool that is aimed at reducing the pollution load in an area
and at the same time minimizing the cost of compliance for the industry.
Features:
● Sectors
would be given energy efficiency targets
and the companies that were able to exceed these targets would get ‘credits’ or
certificates that they could bank or sell to companies that failed to meet the
targets.
Nodal Agency: Bureau of Energy
Efficiency (BEE), a Power Ministry
body.
Activities Eligible for Carbon Credits:
● As
a precursor to the Indian carbon markets, the Environment Ministry listed a
range of activities, called greenhouse
gas mitigation activities, that would be eligible for trading carbon
credits. These include
○ Solar
thermal power
○ Offshore
wind energy
○ Green
hydrogen energy
○ Compressed
biogas energy and
○ Stored
renewable energy.
Difference from other countries:
● One
significant difference in the Indian emissions trading scheme from the ones in
Europe or other countries is that companies wouldn’t be required to cut carbon
emissions in absolute terms.
○ The
EU is required to cut emissions under the provisions of the United Nations
Framework Convention on Climate Change.
○ India doesn’t have an
obligation.
Significance:
● The
credits generated under the forthcoming mechanism will force companies to invest substantially more in deploying
alternative, cleaner sources of energy to meet efficiency norms.
BEE:
● Since
2015, the BEE has been running the ‘Perform,
Achieve, Trade’ scheme under which 1,078 industries spanning 13 sectors
have been getting energy security certificates if they exceeded certain
targets.