India Passes Bill to Accelerate Industrial Clean Energy Adoption, Ban Export of Carbon Credits
India’s parliament passed the Energy Conservation Amendment Bill 2022, enabling a series of moves by the government to regulate and mandate the transition from fossil-based energy to clean and renewable sources in industry, transportation and buildings.
The legislation also allows for the creation of a carbon market in the country, centralizing the trading of carbon and environmental credits across industries.
Speaking in the parliament during the discussion of the bill, India’s Minister of Power and New & Renewable Energy R. K. Singh indicated that requirements in global markets for increasingly green products is a driving force behind the need for industries to shift to cleaner energy sources, referencing the EU’s announcement that it will apply a carbon tax on imported products that do not meet EU climate standards in their production.
“The European Union has already decided that they will levy a carbon tax on imports of steel which is not green. If we don’t convert our industry, our industry will not be competitive, and it will not be able to sell in the foreign market.
“The future is going to be green products.”
The minister also said that the legislation will advance the country’s goal to shift from a net importer of energy to a net exporter, supporting the development of new energy sources such as green hydrogen and ammonia. Earlier this year the Ministry of Power launched a series of initiatives aimed at ramping the country’s green hydrogen production to 5 million tonnes by 2030.
“We can emerge as the global supplier for green hydrogen and green ammonia. That is going to be the future.”
Key features of the bill include provisions enabling the central government to set a minimum share of energy consumption from non-fossil sources for organizations in industries including mining, steel, cement, textile, chemicals, and petrochemicals, transport sectors including railways, and commercial buildings. The bill also allows the government to set requirements for buildings encompassing energy efficiency, conservation and renewable energy use, and extends the scope of the law to large residential buildings.
The bill also enables the establishment of a domestic carbon market, with the central government or an authorized agency issuing carbon credit certificates, with entities able to sell credits if they exceed their minimum energy efficiency or clean energy thresholds, or buy credits to cover requirements that they haven’t yet achieved. The bill effectively consolidates and centralizes India’s current energy efficiency and renewable energy offset systems.
Singh said that the export of carbon credits will not be allowed until India meets its 2030 climate commitments under the country’s Nationally Determined Contribution (NDC), which include reducing emissions intensity by 45% and transitioning to approximately 50% electric power from non-fossil-based sources.
“So long as we do not meet these commitments, we shall not allow any export of carbon credits. These credits will have to be bought by domestic industries and generated by domestic industries.”