Carbon Credit Trading Scheme

• The Carbon Credits Trading Scheme (CCTS) is a market-based mechanism to reduce greenhouse gas (GHG) emissions by creating a national carbon market.
• It enables industries to trade carbon credits, thereby encouraging cost-effective emission reductions.
• CCTS is notified under Energy Conservation (Amendment) Act, 2022.
• Jointly Implemented By: 
  • Bureau of Energy Efficiency (BEE) – Ministry of Power
  • Ministry of Environment, Forest and Climate Change (MoEFCC)

Carbon Border Adjustment Mechanism (CBAM)

• Carbon Border Adjustment Mechanism (CBAM) is a key component of the European Union’s (EU) European Green Deal, aimed at preventing “carbon leakage” and ensuring fair competition between EU industries and foreign producers subject to different climate regulations.
• Sectors Covered under CBAM
  • Cover high-emission sectors like cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.
• Concerns for India 
  • Impact on Exports: Carbon-intensive Indian exports may become less competitive in the European market.
  • Small and Medium Enterprises: Smaller firms may face difficulty in measuring, verifying and reporting product-level emissions.
  • Administrative Burden: Indian exporters need reliable systems for carbon accounting, emissions verification and documentation.
  • Developmental Concerns: Developing countries argue that they should not face the same obligations as historically high-emitting developed economies.
  • Question of Carbon Sovereignty: India may lose revenue if carbon-related charges are collected by the EU rather than through an Indian carbon-pricing system.
  • Risk of Protectionism: India argues that environmental objectives could be used as a justification for protecting European industries.

Source: The Hindu