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By:

Sakshi Mishra

2 February 2025 at 3:10:07 am

India’s Carbon Market Gamble

As India prepares to launch carbon credit trading, weak price signals and institutional flaws threaten to turn a landmark climate reform into a paper exercise. Earlier this year, Union Power Minister Manohar Lal Khattar launched the Indian Carbon Market Portal at the Prakriti 2026 International Conference on Carbon Markets in New Delhi and told the gathering that India was “building a transparent and credible carbon market framework that will serve as a long-term national asset,” with formal...

India’s Carbon Market Gamble

As India prepares to launch carbon credit trading, weak price signals and institutional flaws threaten to turn a landmark climate reform into a paper exercise. Earlier this year, Union Power Minister Manohar Lal Khattar launched the Indian Carbon Market Portal at the Prakriti 2026 International Conference on Carbon Markets in New Delhi and told the gathering that India was “building a transparent and credible carbon market framework that will serve as a long-term national asset,” with formal carbon credit trading set to begin within four months. By any measure, that was a significant moment. But the question nobody at the podium answered is the one that matters most: at what price? India is now among the largest emerging carbon markets in the world. The World Bank’s State and Trends of Carbon Pricing 2026 report, released May 19, finds that direct carbon pricing globally covers 29 per cent of greenhouse gas emissions and generated over $107 billion in revenue in 2025. India’s Carbon Credit Trading Scheme (CCTS), which placed compliance obligations on roughly 490 industrial units across nine energy-intensive sectors from April 2025, will cover an estimated 700 million tonnes of CO2-equivalent once trading opens, per the International Carbon Action Partnership. The legal architecture is in place, the Bureau of Energy Efficiency administers the scheme, and the Central Electricity Regulatory Commission will oversee trading. What that architecture still does not guarantee is a price signal strong enough to actually change industrial behaviour. Institutional Baggage The CCTS does not arrive without institutional baggage. It inherits its participants and its institutional weaknesses from India’s earlier Perform, Achieve and Trade scheme, which BEE launched in 2012. In PAT Cycle I, the non-compliance rate among Designated Consumers was 9 per cent. By Cycle II, it had risen to 56 per cent. The Designated Consumers obligated to purchase 86 per cent of the mandated Energy Saving Certificates were found to be unregistered on the trading platform. Across the first three PAT cycles, approximately 103 lakh ESCerts were issued against a mandated purchase of only 52 lakh, as documented by Prayas Energy Group. The structural oversupply was guaranteed from the outset, and every transaction that eventually happened did so at the BEE-mandated floor price because no credible scarcity existed to push prices higher. Firms responded rationally to what they actually observed: delays, extensions, and the consistent absence of meaningful penalty. The CCTS inherits exactly these participants. The CCTS is an intensity-based, baseline-and-credit system that sets emission intensity targets per unit of output rather than absolute emission caps. This suits a rapidly industrialising economy, but it carries an acute vulnerability to oversupply. First-year targets averaging roughly 2 to 3 per cent reduction across most sectors, combined with unlimited banking provisions, create conditions for a credit surplus before serious trading has even begun. Targets were also revised downward by 15 to 17 per cent between the draft notification and the final October 2025 notification, following industry consultation. A surplus suppresses the carbon price. A suppressed carbon price eliminates the financial incentive to invest in cleaner technology. The global record is instructive. The EU Emissions Trading System operated for 14 years before implementing its Market Stability Reserve in January 2019, during which Phase 2 and Phase 3 prices languished as low as 3 to 7 euros per tonne. Alberta’s TIER system accumulated more than 53 million surplus credits by 2023, with market prices falling 40 per cent below the official price. California avoided structural oversupply by launching its cap-and-trade in 2013 with a clear price floor and an Allowance Price Containment Reserve. India has announced none of these mechanisms. The IEEFA and Environmental Defense Fund recommended in October 2025 that the CCTS adopt a Price or Supply Adjustment Mechanism before trading launches, built around consignment auctions, vintage-based credit classification, and a price corridor. India has not announced any of these mechanisms. There is a structural problem beyond price mechanics. India’s thermal power sector accounts for nearly 39 per cent of the country’s total greenhouse gas emissions, yet the CCTS excludes the power sector entirely from its initial compliance mechanism. No timeline exists for its inclusion. This makes the scheme structurally incapable of driving economy-wide decarbonisation, no matter how well it functions in the industrial sectors it does cover. Commercial Urgency There is also a commercial urgency the government is underweighting. The European Union’s Carbon Border Adjustment Mechanism now applies to Indian exports of steel, cement, aluminium, and fertilisers. Indian exporters who can demonstrate they pay a domestic carbon price under the CCTS can offset part of their CBAM liability. A CCTS that produces certificates but no real price signal serves no CBAM-offsetting function at all. As analysts have consistently noted, credibility cannot be asserted; it can only be demonstrated through consistent enforcement. Three things need to happen before the CCC exchange opens in October 2026. BEE must announce a transparent price stability mechanism so that oversupply does not hollow out the market from day one. The ministry must publish an enforceable penalty schedule for non-compliance with actual consequences, not the procedural deferrals that PAT normalised. And the government must release a concrete sectoral expansion roadmap, including a target year for bringing the power sector into the compliance mechanism. None of these are radical demands. They are features that every functioning carbon market in the world has built in, usually after learning the hard way that a market without a price is just a registry. (The writer is a Research Scholar at University of Allahabad, Prayagraj, where her work focuses on climate change, environmental governance, political ecology, and public policy. Views personal.)

A Comeback for the Ages: How the Mahayuti powered by the BJP Reclaimed Maharashtra

Updated: Nov 25, 2024

A Comeback for the Ages

In an astonishing political turnaround, the ruling Mahayuti coalition, comprising the Bharatiya Janata Party (BJP), Chief Minister Eknath Shinde’s Shiv Sena faction, and Ajit Pawar’s Nationalist Congress Party (NCP), secured a remarkable victory in the 2024 Maharashtra Assembly election. The stunning performance is all the more impressive as it stands in stark contrast to their near-total rout in the Lok Sabha elections held just four months ago. The Mahayuti’s resurgence reflects a disciplined strategy, a deft recalibration of its narrative, and an ability to exploit the opposition Maharashtra Vikas Aghadi’s (MVA) inherent weaknesses.


The results lead the BJP, in a career-best performance in Maharashtra, to firmly stake claim on the Chief Minister’s post with Devendra Fadnavis emerging the fairest man for the job. With no Maratha or OBC narrative-counter-narrative to roil the waters, one does not see any substantive obstacle in Fadnavis’ path to the chair.


As opposed to the Lok Sabha campaign, the Mahayuti and the NDA brass refrained from making personal attacks on the MVA leaders, with PM Modi wisely restraining himself from any ad hominem attacks on NCP (SP) chief Sharad Pawar. This strategy ensured that no sympathy was forthcoming for either Pawar senior or Shiv Sena (UBT) chief Uddhav Thackeray.


The MVA, after its buoyant showing in the Lok Sabha, was plagued by internal discord throughout the run-up to the Assembly polls. Failure to control rebellion within its ranks further eroded its electoral prospects. Persistent disagreements over who would be the Chief Ministerial face, a choice fraught with ego clashes and competing ambitions, undermined the MVA’s ability to project a cohesive front.


The Mahayuti’s resurgence can be attributed to its ability to reorient its strategy on the ground. After their bruising Lok Sabha loss, the BJP and its allies embraced introspection rather than complacency. The Rashtriya Swayamsevak Sangh (RSS) played a critical role, launching an intensive grassroots campaign to counter the narrative set by Muslim NGOs and other organizations that had gained traction during the general elections. The RSS’s network worked tirelessly to consolidate Hindu votes, offering a unified counter-narrative that resonated across urban and rural constituencies.


The MVA also struggled to counter the welfare schemes championed by the ruling Mahayuti government. Programs like the Ladki Bahin Yojana and other targeted initiatives gained traction among critical voter demographics, particularly women, leaving the opposition scrambling for an effective counter-narrative. Moreover, the MVA’s focus on identity politics, including Uddhav Thackeray’s minority appeasement strategies and Congress’s fixation on alleged EVM tampering, failed to resonate with voters seeking tangible governance outcomes.


The BJP’s comeback was grounded in lessons learned from its Lok Sabha defeat. Recognizing its vulnerabilities, the party executed an astute recovery plan, particularly in Vidarbha and Marathwada. In Vidarbha, the BJP managed to win over Dalit and backward class voters, a demographic over which it seemed to be losing its grip in the Lok Sabha. This success was attributed to grassroots outreach and welfare initiatives that struck a chord with marginalized communities.


In Marathwada, the BJP effectively countered the potential disruption posed by quota activist Manoj Jarange-Patil. Jarange-Patil’s inconsistent stance on reservation demands undermined his credibility, allowing the Mahayuti to sideline his influence and retain control over the narrative in the region.


Crucially, the Mahayuti partners rectified the coordination issues that had hampered their Lok Sabha performance. In May, Ajit Pawar’s NCP votes largely failed to transfer to the BJP, exposing fissures within the alliance. By the Assembly polls, however, the Mahayuti had perfected its vote-transfer mechanism. This unity was instrumental in delivering a robust performance, especially in constituencies where seat-sharing dynamics had previously created friction.


What makes the Mahayuti’s victory particularly impressive is its scale, even in the absence of a ‘Modi wave’ that powered the BJP’s dominance in the 2014 and 2019 Assembly elections. In fact, the Mahayuti not only matched but exceeded its past performances, marking a comeback from a highly adverse situation. This triumph underscores the effectiveness of a localized campaign strategy, one that blended welfare politics with organizational discipline and voter outreach.


The BJP’s ability to adapt to changing circumstances is evident in its reinvention of its Vidarbha strategy, where it reversed its previous setbacks. The revival in this region highlights the party’s resilience and its capacity to engage with voter bases through policies tailored to regional concerns.


The Mahayuti’s resurgence was characterized by unprecedented coordination among its partners. Seat-sharing arrangements were streamlined, and candidate selection reflected an emphasis on quality over patronage. Unlike the Lok Sabha polls, where alliances frayed at the seams, the Assembly elections showcased a united front capable of mobilizing voters across party lines.


Ajit Pawar’s NCP votes seamlessly transferred to the BJP and Shiv Sena candidates, ensuring that constituencies critical to the alliance’s success were secured. This level of cooperation was absent just months earlier, making the turnaround all the more remarkable.


Chief Minister Eknath Shinde’s relentless grassroots campaigning played a pivotal role in mobilizing support. Shinde’s direct engagement with voters contrasted sharply with Uddhav Thackeray’s perceived aloofness, a holdover from his tenure as Chief Minister.


While the Mahayuti marched forward, the MVA appeared stuck in reverse. The opposition alliance’s failure to resolve internal discord left it vulnerable to defections and weakened its campaign machinery. Uddhav Thackeray’s attempt to reposition himself as a secular leader has alienated core Shiv Sena supporters. His alignment with minority leaders reinforced perceptions of appeasement politics, further eroding his credibility.


The Congress, meanwhile, failed to address its leadership vacuum. Its repeated allegations about EVM tampering whenever the day goes against them, have now fallen flat, with voters increasingly viewing such claims as a distraction from the real issues. The NCP (SP), under Sharad Pawar with performed remarkably well in the Lok Sabha, struggled to maintain its footing. The MVA’s inability to counter the Mahayuti’s narrative of development and welfare ultimately sealed its fate.


A critical factor in the Mahayuti’s success was its ability to secure the support of women voters in the increased 4 percent voter turnout. Welfare schemes such as the Ladki Bahin Yojana undoubtedly struck a chord with women across caste and class lines, creating a broad coalition of support for all three Mahayuti parties. Women turned out in large numbers, tipping the scales in favour of the ruling alliance.


The MVA, in contrast, failed to articulate a compelling vision for women voters, allowing the Mahayuti to dominate this crucial demographic.


The results highlighted a decisive shift in voter priorities. Ajit Pawar’s comfortable win in the Baramati Assembly segment, despite his wife Sunetra’s loss in the Lok Sabha elections, underscores the electorate’s preference for development over divisive politics. The Mahayuti’s emphasis on governance and welfare resonated with voters, allowing it to consolidate support across regions and demographics.


The Mahayuti’s victory offers valuable lessons for political coalitions across India. Unity, disciplined campaigning and a focus on governance can overcome even the most challenging circumstances. The MVA will have to address its leadership crisis and develop a coherent vision that resonates with voters. Identity politics can work once a while (as it favoured the INDIA bloc in this Lok Sabha polls), but the Maharashtra results prove that the sun is fast setting on such tactics.


The BJP’s ability to better its past performances, even in the absence of a national wave, reflects its adaptability and resilience. As the party looks ahead to civic and other state elections, Maharashtra offers a blueprint for overcoming adversity and achieving electoral success.


This election will be remembered as a contest where development triumphed over division, welfare politics outshone identity narratives.

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