India has the potential to grow global carbon pricing revenues: WB

Chennai:Global revenue from carbon pricing hit record highs in 2023, exceeding $100 billion for the first time. The World Bank finds potential for growth in Brazil, India, and Türkiye, where carbon pricing policies are under development.

In the past decade, the coverage of carbon pricing policies has moved up from 7 per cent of global emissions to 24 per cent. Revenue from carbon pricing hit a record high of $104 billion in 2023. There is further potential on the horizon in Brazil, India, and Türkiye, where carbon pricing policies are under development.

According to the World Bank, large middle-income countries including Brazil, India, Chile, Colombia, and Türkiye are making notable progress towards implementing emissions trading schemes (ETS). While the power and industrial sectors still account for the bulk of carbon pricing coverage, there are also advances in other sectors, including international aviation, shipping, and waste.

India adopted the legal basis for a carbon market, including an Emission Trading Scheme in 2022, and it established the institutional framework for the system over the past year, outlining the roles and responsibilities of the different governing authorities. The intensity-based ETS will build on an existing scheme for energy efficiency in emission-intensive industrial sectors, with the potential to evolve into a compliant carbon market.

Further, countries including India, Indonesia, Morocco, Türkiye, Ukraine, Uruguay, and Western Balkan countries, have implemented, adjusted, or are considering implementing direct carbon pricing to reduce European Union’s Carbon Border Adjustment Mechanism compliance costs and to capture revenue that would otherwise be paid to the EU.

India, which has revised its carbon pricing plans, is simultaneously advancing a baseline-and-credit ETS and a national crediting mechanism. In terms of regional supply of carbon credits, China and India remain the largest host countries in terms of issuances, with a roughly 15 per cent share each, but with a 40 per cent year-on-year decrease in issuance volumes respectively. Almost 75 per cent of the potential credit volume is based in Asia, mainly in Bangladesh, China, and India, finds WB. end