The Hindu Editorial Analysis- 14th July 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Assessing India’s carbon credit trading scheme targets

 Why in News? 

 The Indian government has set targets to reduce greenhouse gas emissions for factories in eight major industries under its Carbon Credit Trading Scheme (CCTS). These industries include aluminium, cement, paper and pulp, chlor-alkali, iron and steel, textiles, petrochemicals, and oil refineries. 

What is the PAT Scheme?

• PAT = Perform, Achieve and Trade
•  It is India’s flagship energy efficiency programme for large industries. 
•  Under PAT: 
•  Energy-intensive industries are given energy-saving targets. 
•  Those who overachieve can trade excess savings (as certificates). 
•  Those who underperform can buy certificates instead of costly upgrades. 

Findings from PAT Cycle I (2012–2014)

• Paper: Increased energy intensity. 
• Chlor-alkali: Increased energy intensity. 
• Aluminium: Decreased energy intensity. 
• Cement: Decreased energy intensity. 

 At the entity level, results were mixed: 

•  Some factories used more energy per unit. 
•  Others used less energy per unit. 

 When combining emissions, output, and price data (adjusted for inflation): 

•  The overall energy used per unit of output decreased. 

Key Insights

•  Even if some sectors become less efficient, the overall economy can still improve. 
•  This pattern repeated in other PAT cycles too. 
•  Takeaway: Market mechanisms in PAT helped reduce overall energy intensity. 
•  Companies avoided costly upgrades by buying efficiency certificates. 
•  But this does not confirm whether the reduction was truly ambitious or just business-as-usual. 

 How Should We Measure Ambition? 

• Entity level: Not sufficient to assess ambition. 
• Sector level: Can be misleading. 
• Economy-wide: Most meaningful for evaluating ambition. 

 Market-based systems like emissions trading focus on total reduction, not on who does it. So, assessing ambition must be done at the economy-wide level, not by adding up sector/entity performance. 

 Are Sector/Entity-Level Targets Still Useful? 

 Yes, but only for managing financial transfers between industries. They do not reflect the true reduction in overall emissions. 

 As per a CEEW study, entity/sector targets decide who pays whom, not how much pollution is cut in total. 

 How Should We Assess CCTS Target Ambition? 

•  Don’t compare CCTS sector targets with past PAT performance (past may not reflect future potential). 
•  Instead, compare with: 
•  India’s Nationally Determined Contributions (NDCs) 
•  Pathway to net-zero by 2070 
•  Ambition should increase over time — future goals must be tougher than the past. 

 Assessment of Industrial Targets under India’s CCTS 

Based on recent modelling aligned with India’s 2030 NDC goals:

•  The carbon dioxide emissions intensity of the energy sector (per unit of GDP) is expected to decline by 3.44% annually between 2025 and 2030. 
•  For the manufacturing sector, the Emissions Intensity of Value Added (EIVA) is projected to decline by at least 2.53% annually in the same period. 

 This means: 

•  Industry is expected to decarbonise more slowly than the power sector, which has more affordable mitigation options. 

 How Does This Compare with CCTS Targets? 

For the eight industrial sectors covered under the Carbon Credit Trading Scheme (CCTS):

•  The combined average annual reduction in EIVA, based on current targets and projections (including production growth and commodity prices), is about 1.68% between 2023–24 and 2026–27. 

Key Insight:

•  This 1.68% reduction rate is lower than the expected rates for both the energy sector (3.44%) and the manufacturing sector as a whole (2.53%). 
•  Therefore, early evidence suggests that the industrial decarbonisation targets under CCTS may not be ambitious enough. 

 Conclusion 

 While this comparison is not exact — because the carbon trading scheme includes only part of India’s manufacturing sector — it is still the best available benchmark for now, until detailed studies are done for all sectors. In the end, it is the overall (aggregate) drop in emissions intensity that will show whether India’s efforts are truly ambitious. 

Smoke and sulphur

Why in News?

Environmental standards must be uniform across India.

Introduction

India's Environment Ministry has rolled back its 2015 mandate that required coal power plants to install Flue Gas Desulphurisation (FGD) systems. This affects air pollution control, especially for sulphur dioxide (SO₂), a harmful gas. The decision, based on cost concerns and scientific advice, raises concerns about public health, policy consistency, and transparency in environmental decisions.

Policy Rollback: FGD Installation Exemptions

• The Environment Ministry has exempted most coal-fired power plants from installing Flue Gas Desulphurisation (FGD) systems.
• This reverses the 2015 mandate that required all such plants to adopt FGDs by 2017.
• India has around 180 coal power plants (with about 600 units), but only 8% have installed FGDs.
• Most of these compliant plants belong to the public-sector NTPC.

Why FGDs Matter: Health and Pollution Concerns

• FGD systems are designed to cut sulphur dioxide (SO₂) emissions, a harmful gas.
• SO₂ is monitored by the Central Pollution Control Board (CPCB) due to its potential to harm human health.
• SO₂ can also form sulphates in the air, which contribute to particulate matter (PM) pollution.

Weak Implementation: Reasons for Delay

• Reasons cited for the poor implementation of FGD norms:
• Limited number of vendors
• High installation costs
• Potential rise in electricity bills
• COVID-19 disruptions
• Despite missing the 2024 deadline, the Environment Ministry has formally rolled back the requirement.

Scientific Justifications for Exemption

• Expert appraisal committee findings:
• Indian coal is naturally low in sulphur.
• Cities with and without FGD units show similar SO₂ levels, both below permissible limits.
• Concerns about sulphates are considered overstated.
• Sulphates may have a cooling effect that offsets greenhouse warming — so reducing them might worsen climate change.
• This view is supported by the Power Ministry.

IPCC Perspective: Nuanced View

• The IPCC does recognize sulphates' temporary cooling effects.
• However, this is not seen as a benefit — just a side-effect, not a reason to retain SO₂ emissions.
• Relying on sulphates for cooling is scientifically controversial and not recommended.

Uneven Rules: Location-Based Exceptions

• A minority (about 20%) of plants must install FGDs by 2028:
• Plants within 10 km of the NCR
• In cities with over 1 million population
• Located in pollution hotspots
• This creates inconsistent environmental standards across the country.

Call for Transparency: Public Debate Needed

• Changing pollution policy without a public, scientific debate weakens accountability.
• Revising norms should be science-led, but also transparent and consultative.
• Without open discussion, this move risks undermining public health and environmental trust.

Conclusion

Though the move may reduce costs and delays, it weakens pollution standards without wide public discussion. By applying different rules based on location and citing uncertain benefits of sulphates, the government risks undermining scientific credibility and climate goals. Strong, science-based policies and uniform regulations are vital to protect public health and maintain trust in environmental governance.