Environment Ministry Sets Up National Authority to Launch Carbon Markets

Swift Summary

• The Ministry of Habitat, Forest and Climate Change has constituted a ‘National Designated Authority (NDA)’ under Article 6 of the Paris Agreement to support a carbon emissions trading regime.
• Article 6 outlines the framework for international carbon markets and was finalized during COP29 in Baku, Azerbaijan, in November 2024.
• The NDA is a mandatory requirement under Article 6 and will be led by a 21-member committee headed by the Secretary of the Environment Ministry. Other members include representatives from Ministries such as External Affairs, Renewable Energy, NITI Aayog, Steel Ministry, and others; maximum representation comes from the Environment Ministry.
• Key functions of NDA: Recommending project activities for emission reduction trading units aligned wiht sustainable development goals; evaluating projects for approval; authorizing carbon credits to contribute to India’s targets under its Nationally Determined Contributions (NDCs).
• India’s NDC goals include reducing emission intensity of GDP by 45% by 2030 compared to 2005 levels, achieving non-fossil fuel electric power capacity targets (50% cumulative), and creating considerable carbon sinks through afforestation efforts.

Indian Opinion Analysis
The establishment of India’s National Designated Authority (NDA) marks a significant step toward operationalizing international commitments made under the Paris Agreement. By enabling efficient oversight over potential carbon trading projects, this body could play an integral role in aligning climate interventions with both global obligations and national priorities like renewable energy shift or afforestation drives.

Additionally, India’s ambitious NDC goals-such as cutting GDP emission intensity and increasing reliance on non-fossil fuel electricity-will likely rely on mechanisms that encourage private sector participation alongside governmental action. Transparent processes ensured by institutions like NDA may also enhance credibility around environmental accountability globally while offering economic opportunities through market-based solutions like emissions trading systems.

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