Introduction
The article talks about Carbon Markets and the upcoming 29th Conference of Parties (COP29) happening in Baku, Azerbaijan, next month. This meeting aims to speed up how Indian industries adapt to carbon markets. The main focus is on improving climate finance and understanding carbon markets better. A key part of this is Article 6 of the Paris Climate Agreement from 2015, which explains how countries can trade carbon credits. These credits are earned when countries reduce or remove greenhouse gas emissions, such as by using renewable energy or protecting forests.
What are Carbon Markets?
Carbon markets are systems designed for buying and selling carbon credits, which represent a specific amount of greenhouse gas emissions that have been either reduced or removed from the atmosphere. The primary objective of these markets is to encourage emission reductions and help combat climate change. Here’s a breakdown of how they function:
- Understanding Carbon Credits: A carbon credit usually equals one ton of carbon dioxide (CO2) or an equivalent amount of other greenhouse gases. Countries or companies earn these credits when they lower their emissions through various methods, such as using renewable energy sources or improving energy efficiency.
- The Trading Process: In a carbon market, companies that manage to reduce their emissions more than what is required can sell their excess credits to other companies that may find it challenging to meet their own emission targets. This trading system creates a financial incentive for businesses to decrease their emissions.
Article Explanation
Carbon markets have existed for almost 20 years but have had issues, like being unclear and facing criticism for not really reducing emissions. Despite some revival in interest, there is still confusion about how to verify these carbon credits. There is hope that the Baku meeting will help resolve these problems so that countries can start using legal carbon credits by next year. India is in a good position because it plans to get half of its electricity from non-fossil sources by 2030, which will allow it to take part in many carbon reduction projects.
Moreover, private companies in India are also launching creative forestry projects that can help lock in carbon. These projects can produce carbon credits for multinational companies to trade in voluntary carbon markets.
India’s iron and steel industries are expected to meet new emission standards by 2025, which will limit carbon emissions per product. This could help start India’s carbon market, but it may involve complicated calculations, and there are concerns that companies might not feel enough pressure to comply based on past experiences.
Calculating how much carbon is saved can be challenging. To make this work, India needs to create a clear and fair policy for measuring carbon reductions that aligns with international standards. This approach is crucial for enhancing India’s role in global carbon markets and effectively tackling climate change.
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