Carbon pricing challenges

India's piecemeal approach to carbon pricing, driven by emerging trade barriers, is not a long-term strategy

Market-based solutions to carbon mitigation have spread rapidly, particularly since the Paris agreement of 2015. According to a recent World Bank report, they are now implemented or planned in 73 national and subnational jurisdictions and cover 11.66 billion tonnes of Carbon dioxide equivalent or CO2e, which amounts to about 23 per cent of the global greenhouse gas emissions.  

Market-based solutions have basically two broad forms. One is the pricing of carbon emissions in specific sectors without specifying a target level. It relies on the cost of carbon emissions to encourage mitigation activities. The second is a cap-and-trade (CaT) system in