India’s Carbon Credit Scheme Receives U.K. Recognition

• Carbon Credit Trading Scheme (CCTS): India’s CCTS has been recognised by the United Kingdom as a qualifying carbon-pricing scheme under the UK’s Carbon Border Adjustment Mechanism (CBAM).
• Purpose: CCTS seeks to reduce, remove or avoid greenhouse-gas emissions by pricing emissions through Carbon Credit Certificates (CCCs).
• UK CBAM: The UK’s CBAM is scheduled to come into force in January 2027 and covers carbon-intensive products including iron and steel, aluminium, cement, fertiliser and hydrogen.
• Avoiding Double Taxation: Recognition allows carbon prices already paid in India under CCTS to qualify for carbon-price relief against the UK CBAM liability, preventing double carbon pricing.
• Benefit to Exporters: Indian exporters, particularly in iron, steel and aluminium, can benefit through lower effective CBAM liability for eligible goods.
• Indian Carbon Market: CCTS forms part of India’s developing Indian Carbon Market (ICM), with mechanisms for compliance, offsets, monitoring, reporting and verification.
• Institutional Framework: India has established mechanisms for Greenhouse Gas Emission Intensity (GEI) targets, carbon-credit methodologies and accreditation of carbon-verification agencies.
• Prelims Trap: CCTS is not the same as the UK CBAM. CCTS is India’s domestic carbon-pricing mechanism, while UK CBAM applies a carbon-related charge to certain imports.

UPSC Prelims Question – English

Q. With reference to India’s Carbon Credit Trading Scheme (CCTS), consider the following statements:

1. The United Kingdom has recognised India’s CCTS as a qualifying carbon-pricing scheme under its CBAM framework.
2. Such recognition can allow eligible Indian exports to receive relief against the UK’s CBAM liability for carbon prices already paid in India.
3. CCTS is designed to price greenhouse-gas emissions through Carbon Credit Certificates.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (d) 1, 2 and 3

Explanation:

• Statement 1 – Correct: The UK has included India’s CCTS in its list of qualifying carbon-pricing schemes.
• Statement 2 – Correct: Carbon prices already paid under an eligible overseas scheme can qualify for carbon-price relief, helping avoid double taxation.
• Statement 3 – Correct: India’s CCTS aims to price GHG emissions through Carbon Credit Certificates.