The Ministry of Environment, Forest and Climate Change (MoEFCC) has constituted a National Designated Authority (NDA), as required under the Paris Agreement, to advise the Union government on carbon emission trading and reductions.
Carbon trading, also known as carbon emission trading, is a mechanism that allows countries and companies to buy and sell carbon credits. Each credit represents the reduction of one metric ton of carbon dioxide or its equivalent greenhouse gas from the atmosphere.
Under the framework of Nationally Determined Contributions (NDCs), countries are obliged to cut emissions in line with their targets. If a company is able to reduce emissions beyond its mandate, it can generate carbon credits that may be sold to another entity that has failed to meet its reduction goals.
The same principle applies to countries, making carbon trading a flexible yet effective tool to ensure overall emission reductions.
These reductions are typically achieved through the adoption of clean technologies, renewable energy projects, afforestation, and other climate-resilient measures.
ROLE OF THE NDA
The NDA is a 21-member committee chaired by the Secretary of the Environment Ministry. It has been tasked with recommending which activities can be considered for the trading of emission-reduction units under Article 6 of the Paris Agreement.
Article 6 provides the framework for cooperative international approaches to mitigate climate change by transferring carbon reduction outcomes across borders. It also emphasises sustainable development, technology transfer, and innovations in carbon capture, utilisation, and storage.
The Authority will be responsible for receiving projects and activities for evaluation, approval, and authorisation at various stages of their implementation.
It will also authorise the use of emission reduction units from these projects towards India’s NDC targets and other international mitigation purposes. Beyond approvals, it will track the progress of projects to ensure they comply with the principles laid down by the Government of India.
India has already reached the milestone of achieving 50 per cent of its total installed energy capacity from non-fossil fuel sources.
The establishment of the NDA therefore marks another important step in strengthening the country’s climate action strategy, helping reduce greenhouse gas emissions and ensuring that India meets its NDC commitments on time.
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