India to launch carbon market by 2026, says Power minister, Energy News, ET EnergyWorld

New Delhi: India is set to launch its first carbon market by mid-2026, Union Minister for Power Manohar Lal said on Friday. The move is expected to support industries in meeting global carbon emission norms and reducing reliance on fossil fuels.

The minister said the initiative would be crucial for exporters, particularly in sectors such as steel and cement, which face compliance requirements under the European Union’s Carbon Border Adjustment Mechanism (CBAM). The CBAM imposes tariffs on carbon-intensive imports, making it necessary for Indian companies to adopt cleaner energy practices to remain competitive.

“Very soon we are going to launch an independent carbon market of our country, likely by mid-2026. Those using fossil fuels or emitting carbon will have to buy carbon credits, while those using power from non-fossil sources will earn credits that they can sell in the market,” the minister said.

The Energy Conservation (Amendment) Bill, 2022, passed by Parliament, provided the foundation for setting up carbon credit trading systems in India. Under this framework, industries that reduce emissions will generate credits that can be sold, while high-emission companies will be required to purchase credits to offset their carbon footprint.

The minister said the Indian Energy Exchange Ltd, Power Exchange India Ltd, and Hindustan Power Exchange Ltd are expected to develop carbon credit trading platforms to facilitate the market.

At the event, the power ministry released the annual ratings of distribution companies (discoms) based on financial sustainability, billing efficiency, collection efficiency, and distribution losses. Adani Electricity Mumbai Ltd secured the top position with a score of 99.8, followed by Dakshin Gujarat Vij Company Limited.

The government aims to prepare industries for a structured transition towards clean energy, ensuring compliance with international trade norms and supporting India’s long-term sustainability goals.

• Published On Feb 22, 2025 at 08:40 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETEnergyworld App

• Get Realtime updates
• Save your favourite articles

Scan to download App