Editorial Analysis for UPSC & UPPCS — Agra

Context

• The BRICS Carbon Markets Partnership has gained importance discussions on strengthening cooperation among BRICS countries in carbon markets. The central issue is that BRICS countries have different carbon trading systems, emission measurement methods and verification standards. Hence, BRICS should first develop common rules for measuring and verifying carbon emissions before attempting to establish a common carbon trading platform.

What Is a Carbon Market?

• A carbon market is a mechanism through which emission reductions are converted into tradable units called carbon credits.

Types of Carbon Markets

Why Does BRICS Need a Carbon Market Partnership?

• BRICS countries are important players in global energy consumption, industrial production and greenhouse gas emissions. However, their carbon markets operate differently.

Different approaches followed by major BRICS economies

Major problems

• Different standards: Countries use different methods to calculate emission reductions.
• Different regulations: Carbon credits may have different legal status.
• Verification issues: Different countries may follow different verification procedures.
• Registry incompatibility: Carbon credit databases may not communicate with each other.
• Double counting: The same emission reduction may be claimed by two different countries.

Core problem: A carbon credit generated in one BRICS country may not automatically be recognised in another country because their accounting and verification rules differ.

Why Is a Common Carbon Market Important?

A. Trade competitiveness – EU's CBAM

• The European Union introduced the Carbon Border Adjustment Mechanism (CBAM).

What is CBAM?

• It imposes a carbon-related cost on certain imported carbon-intensive products to address carbon leakage.

Products covered include:

• Iron and steel
• Aluminium
• Cement
• Fertilisers
• Electricity
• Hydrogen

Impact on BRICS countries:

• Exporters need reliable emissions data.
• Poor carbon accounting can increase compliance difficulties.
• A common BRICS measurement framework could help exporters demonstrate the carbon intensity of their products.

B. Climate finance

• Mobilises investment in renewable energy.
• Encourages low-carbon technologies.
• Creates incentives for emission reduction projects.
• Can support developing countries in their climate transition.

C. Collective bargaining

A common framework could strengthen BRICS' negotiating position in international climate discussions.

What Does the BRICS Partnership Actually Need?

Article 6 of the Paris Agreement

Article 6 provides the framework for international cooperation in reducing greenhouse gas emissions.

Role of New Development Bank (NDB)

New Development Bank (NDB) can support the partnership through:

• Financing low-carbon infrastructure.
• Supporting carbon market infrastructure.
• Providing technical assistance.
• Supporting pilot carbon exchange projects.
• Mobilising climate finance for developing economies.

Significance for India

India's Carbon Credit Trading Scheme (CCTS)

• Introduced under the Energy Conservation Act framework.
• Nodal ministry: Ministry of Power.
• Bureau of Energy Efficiency (BEE) plays a key implementation role.
• Provides a framework for India's domestic carbon credit trading mechanism.

Challenges Before BRICS

Way Forward

• Develop common MRV standards.
• Ensure transparent and credible carbon accounting.
• Make national carbon registries interoperable.
• Start with small-scale pilot carbon exchanges.
• Follow Article 6 of the Paris Agreement.
• Strengthen NDB's role in climate finance.
• Ensure that carbon trading contributes to actual emission reductions rather than merely allowing offsetting.