Carbon Emissions Trading

Context:

• The 2015 Paris Agreement on climate change includes Article 6, which sets the framework for international carbon markets—allowing countries to trade emissions reductions.

• After long negotiations, Article 6 rules were finalized at COP29 (Baku, 2024).

• A National Designated Authority (NDA) is a mandatory national body required under Article 6 for each country to manage its participation in these carbon markets.

India’s NDA Structure:

• Composition: 21-member committee

• Head: Secretary of the Ministry of Environment, Forest and Climate Change

• Members: Officials from Ministries of External Affairs, Steel, Renewable Energy, NITI Aayog, and other relevant departments

Key Roles and Responsibilities of the NDA:

• Recommend to the government a list of eligible activities/projects for trading emission reduction units under Article 6.

• Modify the list periodically according to national priorities and sustainable development goals.

• Receive, evaluate, approve, and authorize emission reduction projects for participation in carbon trading.

• Authorize the use of emission reduction units toward achieving India’s Nationally Determined Contributions (NDCs).

India’s NDC Commitments:

• Reduce emission intensity of GDP by 45% by 2030 (from 2005 levels).

• Achieve 50% electric power capacity from non-fossil fuel sources by 2030.

• Create an additional carbon sink of 2.5 to 3 billion tonnes of CO₂ equivalent by 2030 through afforestation.

Significance:

• The NDA will facilitate India’s participation in global carbon markets, ensuring projects align with national climate goals.

• It supports transparent and accountable trading of carbon credits, helping India meet its climate commitments efficiently.

• The establishment of NDA is a critical step in operationalizing the market mechanisms under the Paris Agreement’s Article 6.