India to Ban Carbon Credit Export Until Climate Targets Are Met

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India to Ban Carbon Credit Export Until Climate Targets Are Met

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India will prohibit enterprises from exporting carbon credits, as reported by Bloomberg on August 8. The decision was announced by India’s Power and Renewable Energy Minister Raj Kumar Singh. On the same day, the lower house of the Indian parliament, Lok Sabha, approved the Energy Conservation (Amendment) Bill to promote the use of non-fossil fuels and propose a domestic carbon trading market for the first time. Citing Singh, the carbon credits will have to be generated by domestic companies and purchased by domestic companies. According to people familiar with the matter, the ban on carbon credit export might be lifted when India meets its climate targets.

India became the fourth country to announce or plan bans on carbon credit export in recent months, following Papua New Guinea, Indonesia, and Uruguay. These countries worry that, if too many carbon credits produced domestically are sold abroad, they may not have enough carbon credits to fulfill their Nationally Determined Contribution (NDC), a decarbonization obligation under the Paris Agreement. At present, under India’s Perform, Achieve, and Trade (PAT) Scheme, energy-intensive entities from industrial sectors are assigned specific energy reduction targets. These entities are required to achieve these targets so that they can obtain Energy Saving Certificates (ESCerts). Additionally, eligible entities can receive Renewable Energy Certificates (REC) by generating electricity based on renewable energy sources. According to Singh, both the ESCerts and the REC will be merged within the upcoming carbon market.