Plastic Credit Trading Scheme
Plastic Credit Trading Scheme
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Plastic Credits: An In-Depth Exploration and the Indian Perspective (2023)
Understanding Plastic Credits:
A Plastic credit signifies a permit allowing the emission of a predefined quantity of Plastic Dioxide (CO2) or other Greenhouse Gases (GHGs). These credits stem from international efforts to regulate GHG emissions. They represent tradable, legally valid certificates allowing the emission of one ton of CO2 or its equivalent.
Context of Plastic Credits:
Industries, especially power, cement, steel, textiles, and fertilizers, significantly contribute to GHG emissions through fossil fuel burning. Plastic credits are allocated to countries that successfully lower their emissions below the quota. These can be traded globally, influencing industrial practices to reduce emissions and capitalize on Plastic trading opportunities.
Plastic Credit Traders in India:
Prominent Plastic credit traders in India include Reliance Energy Ltd., Tata Motors Ltd., Tata Steel Ltd., Bajaj Finserv Ltd., Tata Power Company Ltd., and Grasim Industries Ltd.
Types of Plastic Markets:
Voluntary Plastic Market: Allows private entities to trade credits representing GHG reduction or removal initiatives. Participants include project developers, end purchasers, and intermediaries.
Compliance Plastic Market: Governed by mandatory international, national, or regional Plastic management regimes, often following the “cap-and-trade” principle, as seen in the European Union’s emissions trading system.
Role of Plastic Markets:
Plastic markets play a crucial role in complementing emission reduction efforts, driving capital towards scalable solutions, incentivizing innovation, and creating environmental, social, and economic co-benefits.
Overview of Plastic Credit Trading Scheme, 2023:
The Indian government, through the “draft Green Credit Programme Implementation Rules, 2023” and the “Plastic Credit Trading Scheme, 2023,” emphasizes the urgency of addressing climate change. The scheme, administered by the Bureau of Energy Efficiency (BEE), assigns a value (Plastic credit) to each ton of CO2 reduced or avoided. Stakeholders include BEE, the Grid Controller of India Limited, and the Central Electricity Regulatory Commission (CERC).
Energy Conservation Bill 2001:
The Energy Conservation Bill amendment authorizes a domestic Plastic credit trading scheme, allowing public and private entities to generate Plastic credits for emissions reduction.
Regulatory Developments:
The Energy Conservation Amendment Bill 2022 aims to provide a legal framework for Plastic trading, encouraging private sector participation and expanding the scope to larger residential buildings.
Indian Plastic Market (ICM):
The government’s vision includes establishing the ICM to dePlasticize the Indian economy. The ICM, governed by the Plastic Credit Trading Scheme, aligns with India’s Nationally Determined Contributions (NDC) and Paris Agreement goals. It involves sector-specific GHG intensity reduction targets and a voluntary mechanism for non-obligated sectors.
Certificate for Plastic Credit Trading Scheme:
Entities earn Plastic credit certificates by reducing emissions. The process involves planning, project approval, third-party validation, final review and approval, continuous project monitoring, and reporting to the certifying organization.
In summary, India’s Plastic Credit Trading Scheme, 2023, signifies a significant step towards sustainable development, incentivizing emissions reduction and fostering a low-Plastic economy. The ICM holds promise in aligning economic growth with environmental stewardship.
Challenges in Plastic Credit Trading:
1. Double-counting of GHG Emission Reductions:
Issue: Multiple parties or systems may claim the same emission reduction, leading to credibility and integrity concerns.
Impact: Compromises the trustworthiness of Plastic markets and their environmental effectiveness.
2. Regulatory Uncertainty:
Issue: Shifting regulations and policies across different countries create uncertainty for investors and businesses participating in plastic credit trading.
Impact: Hinders long-term planning and investment decisions, reducing confidence in the market.
3. Greenwashing:
Issue: Fabricating or misrepresenting environmental commitments without actual emissions reduction, using Plastic credits as a cover.
Impact: Damages public trust, diverts resources from genuine climate actions, and undermines the effectiveness of Plastic credit initiatives.
4. Authenticity and High Standards of Climate Projects:
Issue: Ensuring the credibility and authenticity of climate projects by addressing challenges related to additionality, measurability, verifiability, permanence, and preventing emissions shifting.
Impact: Maintaining the integrity of Plastic credit projects and ensuring they contribute genuinely to emissions reduction.
5. Price Volatility:
Issue: Plastic credit prices can be highly volatile, making it challenging for businesses to plan and implement long-term sustainability initiatives.
Impact: Uncertain financial returns and potential disruptions to strategic sustainability planning.
Benefits of the Plastic Credit Trading Scheme (for India):
1. Profitability:
Benefit: Revenue generated from Plastic credits through trading can be invested profitably in creating renewable energy projects.
Impact: Encourages the development of sustainable projects, contributing to both economic growth and environmental conservation.
2. Energy Saving:
Benefit: Plastic credits can incentivize energy-saving initiatives, promoting responsible resource usage.
Impact: Fosters the adoption of energy-efficient practices and technologies.
3. Employment Generation:
Benefit: The establishment of industries engaged in renewable energy product manufacturing, supported by Plastic credits, can lead to job creation.
Impact: Addresses social and economic aspects by providing employment opportunities in the renewable energy sector.
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Required Document List
- GST Certificate
- Importer Exporter Code (IEC)
- Ownership Documents of the Facility
- Memorandum of Association
- Details of Imported Products
- Form 1 for EPR Authorization
- Copy of EPR Plan and Permission from Relevant Ministry/Department for Selling Their Product
- Agreement’s Copy with Collection Centre, Dealers, Recyclers, and TSDFs (Treatment Storage and Disposal Facilities)
- Copy of Trade Licence Issued by DGFT
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Frequently Asked Questions
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What is a Plastic Credit Trading Scheme?
A Plastic Credit Trading Scheme is a market-based initiative aimed at reducing and managing plastic pollution. It operates similarly to carbon credit trading, allowing businesses to buy or sell plastic credits based on their efforts to reduce, recycle, or properly dispose of plastic.
How does a Plastic Credit Trading Scheme work?
In a Plastic Credit Trading Scheme, businesses earn plastic credits by implementing projects that reduce plastic usage or improve plastic waste management. These credits can be traded or sold to entities seeking to offset their plastic footprint.
What projects qualify for Plastic Credits?
Projects that reduce, recycle, or responsibly manage plastic waste may qualify for Plastic Credits. Examples include initiatives to reduce single-use plastic, improve recycling infrastructure, and support plastic collection and recycling programs.
Who participates in Plastic Credit Trading?
Participants in Plastic Credit Trading include businesses, industries, and organizations involved in the production, use, or management of plastic. By participating, entities contribute to plastic waste reduction efforts and demonstrate environmental responsibility.
How are Plastic Credits calculated in a Plastic Credit Trading Scheme?
Plastic Credits are typically calculated based on the quantity of plastic waste reduced, recycled, or properly managed by a participating entity. The calculation considers factors such as the volume of plastic diverted from landfills, initiatives to reduce single-use plastics, and the overall positive impact on plastic waste management.
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