India Emission Trading Scheme

Posted on June 1, 2011 by

India is the third largest emitter of Green House Gas (GHG) in the world, next only to China and USA. Unlike the US that lacks a national emission trading scheme, both India and China have established their nationwide emission trading scheme to help curb the menace of climate change through mandatory GHG emission reduction.

On July 2010, India formally announced its market-based carbon trading scheme called Perform, Achieve and Trade (PAT). This scheme was implemented on April 1, 2011 and will continue through to 2014.

Through PAT, the government has set mandatory targets for 563 facilities, which include power plants, which account for 54 per cent of India’s energy use. Businesses that need more energy can buy certificates, known as ESCerts (Energy Saving Certificates), from those that use less. This trading scheme will help India reduce carbon emissions by 100 million tons a year.

Apart from PAT, India also has a Renewable Energy Certificate (REC) trading scheme for wind, solar and Biomass power plants. While coal is still the major source of energy for the fast growing economy, renewable sources of energy have climbed up the ladder to stand at 8 per cent of the total power generation.

The REC trading happens once a month. On May 25, 14,000 RECs were traded on the Indian Energy Exchange, with a $4.6 value, while in April only 260 units were traded. Through the REC trading scheme amongst others, the government hopes to be able to generate 72.4 gigawatts of renewable energy, out of which 20 gigawatts would be from solar power, by 2022.

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