The Energy Conservation (Amendment) Bill 2022, recently passed by Parliament, provides the legal framework for a domestic carbon market with the objective of incentivising actions for emission-reduction leading to increased investments in clean energy and energy efficiency areas by the private sector, including residences, commercial buildings, industrial spaces, etc. The Act creates agencies for issuing carbon credit certificates domestically while banning firms from exporting their carbon credits outside the country. Trading in carbon internationally was formalised by the Kyoto Protocol. The Act aims to strengthen India’s carbon reduction promises under the Paris Agreement, COP 26 and COP 27.

 

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