Energetica India Magazine - November 2025

CEO Dastur Energy ATANU MUKHERJEE Q What, according to you, is the fundamental logic behind India’s CCTS? Atanu Mukherjee: Any system of trading — whether in carbon or anything else — must begin with price discovery. Without a market-based mechanism to discover price, there can be no meaningful trading. The idea of the Carbon Credit Trading Scheme (CCTS) is not to create a new tax but to es- tablish a system of price discovery for carbon, much like we do for commodities such as coal or iron. Once there is a price, you can build incentives or deterrents around it. But that price must be discovered through a mar- ket mechanism, not administered by the government. That’s how a market for carbon begins to function. Q Why do you believe a market-determined carbon price is better than an administratively set price? Atanu Mukherjee: When prices are administratively deter- mined, they are often suboptimal and can lead to misallo- cation of capital. A government-set price doesn’t necessari- ly reflect the true cost of carbon mitigation or the value of avoided emissions. On the other hand, a market-determined price is dynamic — it evolves based on demand and supply for emission allow- ances and credits. This allows capital to flow where it is most efficient in achieving emission reduction. In essence, it’s the market — not an administrator — that decides where carbon reduction is most economical. Q What are the essential components of a credible carbon trading architecture? Atanu Mukherjee: For the system to function effectively, it must have four critical layers: 1. Caps on Emissions: There must be defined caps on emis - sions across sectors like power, steel, cement, or agriculture. These caps represent the supply constraint that enables price discovery. 2. Institutional Coordination: A central coordinating body must oversee cap allocation, trading, and compliance. It should act as the orchestrator of the entire system. 3. Trading Exchange: A carbon exchange needs to exist to facilitate the trading of emission certificates, which are the financial representation of allowable emissions. 4. Regulation and Enforcement: A strong regulatory frame- work is non-negotiable. There must be mechanisms for mon- itoring, reporting, and verification — and clear consequences for non-compliance. Together, these layers make the system credible and capable of delivering real emission reductions. Q How do technologies like CCUS fit into such a system? Atanu Mukherjee: Carbon Capture, Utilisation and Storage (CCUS) and other low-carbon technologies are economic deci- sions, and they need a price signal to be viable. Today, we have mechanisms like 45Q in the US, which assign an administra- tive price to carbon capture. But such administrative pricing often leads to inefficiencies. C CUS and other low-carbon technologies are economic decisions, and they need a price signal to be viable, said Atanu Mukherjee, CEO of Dastur Energy Inc. and M.N. Das- tur & Co (P) Ltd., in an interview with Energetica India. 24 energetica INDIA- November_2025 INTERVIEW