India on the verge of introducing domestic carbon market

The lower house of the Indian parliament, the Lok Sabha, has passed a bill empowering the government to introduce a market for carbon credits. The Energy Conservation (Amendment) Bill 2022 will effectively set permissible limits for carbon emissions, with permits issued by central government or a designated government agency. Crucially, India’s power and renewable energy minister Raj Kumar Singh has said that these credits will not be exported. In banning the export of carbon credits, India joins Indonesia, Honduras and Papua New Guinea. The legislation also includes a clause that could allow the government to obligate certain consumers to restrict the amount of fossil-fuel based supply in their energy mix. These obligations are most likely to be imposed on firms in hard-to-abate sectors such as steel and cement.