Which of the following statements correctly describe the carbon markets in India?
-
Carbon credits can be generated by afforestation and renewable energy projects.
-
India has launched a domestic voluntary carbon market.
-
Carbon markets are monitored under the Income Tax Act, 1961.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 1 and 2 only.
The correct option based on the statements is 1 and 2 only.
-
Statement 1 (Correct): Carbon credits are fundamentally generated by projects that reduce, remove, or avoid greenhouse gas (GHG) emissions. This includes afforestation (removals) and renewable energy projects (avoidance/reduction).
-
Statement 2 (Correct): India has launched a domestic carbon market framework. While a fully regulated compliance market is being developed, a voluntary mechanism exists and is being formalized under the overall structure governed by the Bureau of Energy Efficiency (BEE) and the Central Electricity Regulatory Commission (CERC). The Carbon Credit Trading Scheme, 2023, establishes this framework.
-
Statement 3 (Incorrect): Carbon markets and their trading are regulated primarily under the Energy Conservation Act, 2001 (amended in 2022), and rules notified by the Ministry of Power and the Ministry of Environment, Forest and Climate Change. They are not primarily monitored under the Income Tax Act, 1961, although income from carbon credit sales is subject to taxation.