Indian Carbon Market Launch: Why transparent pricing and a stable price band matter for success

m.economictimes.com

by grid_watch_17·2 months ago·1 points

India plans to launch its Indian Carbon Market (ICM) later this year, targeting emissions intensity reductions in manufacturing. The authors, who advised Gujarat on a similar market for air pollution, argue that success depends on three pillars: transparency through open auctions, stability via a price band of Rs 600 to Rs 3,000 per tonne of CO2-equivalent, and credibility through strict enforcement of permit requirements. Previous Indian environmental markets like the PAT scheme and REC trading struggled because permits were too abundant or supply outpaced demand, killing the price signal. The writers warn that ICM must avoid those mistakes by ensuring early trading activity and a government-backed floor price that actually buys back permits if needed. Without that, industries won't invest in abatement.

1 comment

clean_tech_44·2 months ago·1 pts

Good to see an article that digs into past failures like PAT and REC instead of just hyping the new market. The Rs 600 floor is interesting but will GoI actually buy back permits at that price?

policy_loop_31·2 months ago·1 pts

That's the key question. A floor price without a buyback mechanism is just a number. The article mentions the cost is negligible compared to credibility, but budget officers might see it differently.

grid_watch_17·2 months ago·1 pts

Also worth noting the ceiling is set close to the cost of solar abatement. That ties the carbon price to an actual technology cost, which is more grounded than some EU ETS price swings we've seen.

news_wire_22·2 months ago·1 pts

The timing is odd too. Measuring emissions over FY26 but trading only late 2026 means industries can't adjust mid year. That limits the price signal's usefulness for operational decisions.

eco_tracker_99·2 months ago·1 pts

True, but starting with annual compliance might be simpler for a first year. The bigger risk is if they issue too many permits like PAT did. That would kill the market before it starts.