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India passes bill on emission limits and mandated use of green fuels

© Shutterstock / Happy TogetherSolar energy power plant.

India’s Lob Sabha, its lower House of Parliament, has approved a bill setting out measures of how to achieve its Nationally Determined Contributions (NDCs), approved by the Union Cabinet in early August.

Efficiency standards have been set for vehicles, ships, equipment and buildings.

Emission caps for industry actors, lays the ground for a carbon credit market though detail on architecture still forthcoming.

Green fuels for industry and agriculture given a mandate.

The Energy Conservation (Amendment) Bill mandates limits to fossil fuel emissions and stipulates the requirement for green alternatives, while power minister R K Singh has reportedly called a “the bill for the future.”

Incentivising a shift to low-carbon and green alternatives is following a two-pronged approach – the setting of standards for products, technologies, and performance, and a cap and trade system.

The Bill proposes the issuance of carbon credit certificates to entities registered under a national emissions trading scheme (ETS), specifics of which are under discussion. Emissions trading systems, of which there are 34 in the world, typically take years to negotiate and design.

For some years India has had a scheme in place to reduce energy consumption in energy-intensive industries called the Perform, Achieve and Trade (PAT) Scheme. Energy reduction is rewarded with an ability to trade the excess energy.

Voluntary carbon markets operate in India but new credits to remain separate

As India’s new NDC focuses on emissions intensity, its ETS may be based more on such relativities than absolute emissions caps. Details of types of entity and whether it will follow an organisational or regional focus are still awaited.

It may be some time before rules on floor and ceiling carbon prices are made and controls on carbon price volatility, although Power Minister Singh has made a statement that carbon credits will not be allowed for export, to prevent leakage.

Professor Garg of the Indian Institute of Management, Ahmedabad, is reported to have recommended that India create a National GHG Inventory Management System (NIMS) that would be linked with all national GHG reporting requirements to UNFCCC, carbon registry, and all policies and measures to implement India’s NDCs.

Mandates for alternative fuels and energy efficiency

As well as emission limits, the Bill imposes mandates on the use of non-fossil fuels in industry such as green hydrogen, green ammonia and biomass and ethanol.

It also tightens the Energy Conservation Building Code and gives more teeth to the State Electricity Regulatory Commissions.

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