Crisil-backed report seeks market-driven strategy for India for net-zero emissions by 2070

A new report launched by Eversource Capital in partnership with Crisil highlights the critical role of emissions intensity-based targets in the development of a robust and effective carbon market in India. The report, titled "Building a Global Carbon Market: Accelerating India's Progress Towards Net Zero," was unveiled by Yogieta Mehra, Joint Secretary of the Central Electricity Regulatory Commission, at an event attended by industry leaders, policymakers, and experts.

The report emphasizes that carbon markets present a significant opportunity for India to reconcile its emission reduction goals with its economic growth imperatives. It advocates for a phased, inclusive, and transparent market design tailored to India's unique socio-economic context, underpinned by strong governance, credible verification mechanisms, and broad stakeholder alignment.

Dhanpal Jhaveri, CEO of Eversource Capital, stated, "A well-designed carbon market represents a pivotal opportunity for India to align climate ambition with economic growth. We believe emissions intensity-based targets offer a pragmatic and scalable foundation for market development. Over time, a robust and credible carbon pricing mechanism will unlock capital, accelerate decarbonisation, and create investable pathways across hard-to-abate sectors."

The report argues that India should initially focus on emissions intensity targets to balance low-carbon growth with economic competitiveness. It suggests a gradual transition to absolute emission caps as the market matures. This evolution is projected to accelerate India's shift towards a low-carbon economy, fostering innovation and attracting investment in clean energy technologies.

The report outlines several key recommendations for the design of India's carbon market, including leveraging technology for reliable and transparent Monitoring, Reporting, and Verification (MRV) processes, establishing effective market infrastructure for carbon credit trading, ensuring a well-designed demand-supply balance, strategically determining market coverage across sectors and pollutants, defining credit allocation and progressively stricter emission targets, and implementing strict penalties with revenues directed towards clean energy initiatives.

The report underscores the pivotal role of a market-driven strategy in supporting India's long-term climate commitment to achieve net-zero emissions by 2070. It stresses the importance of setting carbon prices above the marginal abatement cost for hard-to-abate sectors to incentivize investments in cleaner alternatives and significant emissions reductions.

Pranav Master, Senior Practice Leader and Director at Crisil Intelligence, commented, "We are pleased to launch this report, which provides a comprehensive framework for building a sustainable and scalable carbon market in India. Our aim is to foster collaboration among key stakeholders and help position India as a global leader in carbon markets."