The carbon credit market is set to function properly with clear regulations and trustworthy oversight approved by The Central Electricity Regulatory Commission (CERC).
The aim is to create a transparent, organized market for buying and selling carbon credits on power exchanges
The CERC regulates compliance markets for obligated entities to reduce carbon emissions, while offset markets allow exempt organizations to offset their emissions.
These draft regulations are titled Central Electricity Regulatory Commission (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2024.
The CERC draft proposal indicates that the Grid Controller of India will oversee the registry, which will serve as a database for all CCC transactions.
Key Highlights of the Draft Regulations:
Power exchanges approved by CERC will host all trials, dividing the carbon credit market into two segments: voluntary participants and businesses requiring CCCs for regulatory compliance.
The Bureau of Energy Efficiency will categorize CCCs for both obligated and non-obligated entities seeking to offset or comply with their carbon footprint.
Methodology:
The exchanges will use a bidding system to set the price of carbon credits.
A price range established by CERC, which includes a minimum floor price and a maximum forbearance price, will serve as the basis for this process.
The goal of this approach is to guarantee fair pricing free from significant price fluctuations.
The BEE will keep an eye on the market to ensure that trading is open and compliant with regulations. In order to monitor any rule violations, they will also collaborate closely with power exchanges.
Businesses that violate the regulations three times in a quarter risk a six-month trading ban.
These rules will establish a regulated carbon credit market in India if they are put into effect. This market can support the adoption of clean energy, encourage emission reduction initiatives, and help India achieve its climate goals, CERC said.
Power exchanges will be utilized for trading CCCs, necessitating CERC approval for eligibility, price discovery, and registry interaction guidelines.
