India will ban the export of carbon credits to companies until they meet its climate targets, power and renewable energy minister Raj Kumar Singh told lawmakers debating changes to the country’s energy conservation law on Monday.
“Carbon credits are not going to be exported. No question,” Singh said, without giving details of timelines for when the curb would be effective or for the nation’s carbon market to start. “These credits will have to be generated by domestic companies, bought by domestic companies.”
The government is seeking changes to the energy conservation law to create a domestic carbon market and push through energy transition goals that will help limit climate change. The new law will prepare Indian companies for the looming carbon taxes in export markets and help transform India — a large energy importer — into a net exporter of energy in the coming years by utilizing its clean energy potential.
According to revised submission approved by the cabinet last week, India aims to increase the share of clean energy in its electricity mix to 50% by the end of the decade, from around 42% today. In addition, the country wants to reduce the emissions intensity of the economy by 45% from 2005 levels.
The country currently has offset markets in energy efficiency as well as renewable energy consumption. Companies are awarded certificates for going past their obligations and they can sell those certificates to entities that fall behind targets. Both these instruments will be merged within the carbon market, Singh said.
India’s revised NDCs failed to mention a key target announced by Modi at the Glasgow climate summit last year– the installation of 500 gigawatts of non-fossils-based power capacity.