India is gearing up to introduce its much-anticipated carbon market by 2026, according to Power Minister Manohar Lal. This initiative is expected to play a vital role in helping industries transition towards greener practices while ensuring compliance with international carbon regulations.
The minister commented on the news by saying: “Very soon we are going to launch an independent carbon market of our country…Likely by mid-2026. Under this programme, one who uses fossil fuel or emits carbon would have to buy carbon credits and those who would use power from non-fossil sources would have carbon credits which they call sell in the market. So, the market for sale and purchase of carbon credits, which is not there in our country now, will be launched in 2026.”
Addressing Exporter Concerns Over EU’s Carbon Border Tax
The carbon market is particularly crucial for Indian exporters, as they must adhere to global emission norms to remain competitive. “Compliance with international carbon regulations is essential for businesses, especially those exporting to markets with stringent environmental policies,” said the minister on Friday.
Sectors like steel and cement have expressed concerns over the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on carbon-intensive imports. The introduction of carbon credits will incentivize manufacturers to adopt green energy solutions, reducing carbon emissions and enhancing compliance with EU regulations.
Legislative Framework and Market Mechanism
The foundation for India’s carbon market was laid in 2022 with the passage of the Energy Conservation (Amendment) Bill. This legislation set the stage for establishing trading systems where companies can buy and sell carbon credits. The market will encourage businesses to cut emissions by leveraging financial incentives for sustainability efforts.
Stakeholders have been eagerly awaiting the implementation of this carbon market, which is expected to accelerate India’s transition to a low-carbon economy. By promoting cleaner industrial practices, the initiative will not only support environmental goals but also enhance India’s competitiveness in the global market.
