Energetica India Magazine - November 2025

If we have a market where carbon has a discovered price, that price will guide whether CCUS investments are feasible or not. It will also determine the kind of projects that attract capital. In that sense, a carbon market provides the economic logic for technology adoption. Q How should sectors like agriculture or small industries be treated within the CCTS framework? Atanu Mukherjee: In sectors like agriculture, particularly among small farmers, the approach has to be incentive-based, not punitive. You cannot impose a tax on small farmers and expect them to sustain it — they operate on extremely thin margins and are price takers, not price makers. The right approach would be to incentivise efficiency im - provements — for instance, through better practices or tech- nologies that reduce emissions or enhance productivity. Once carbon has a price, you can structure benefits for farmers to adopt such improvements, with returns accruing over time as efficiency increases. The purpose should be to make the system productive and enabling, not extractive. Q How can we ensure that carbon trading leads to real emis- sion reductions rather than just shifting emissions around? Atanu Mukherjee: The key lies in making the system com- pliance-based rather than purely voluntary. In a voluntary framework, participation and enforcement are weak, which can lead to emission displacement rather than reduction. In a compliance system, entities are mandated to stay within caps. There are penalties for non-compliance, and transac- tions are governed by strict monitoring and verification pro - tocols. This ensures that reductions are genuine, measurable, and enforceable. Q Which sectors in India should be prioritised under CCTS initially? Atanu Mukherjee: The iron and steel and cement sectors are logical starting points. They contribute significantly to In - dia’s industrial emissions and are foundational to the econ- omy. Take the example of India’s secondary steel sector, which ac - counts for about 45 percent of the country’s steel production. These are mostly small and medium units, many of which are highly carbon-intensive. Shutting them down is not the answer — that would be socially and economically disruptive. Instead, these industries should be brought into the carbon market framework, where price discovery guides the moderni- sation process. Over time, as they adapt, the scope can ex- pand to other sectors like power and agriculture. Q What, according to you, will make India’s CCTS both ef- fective and sustainable? Atanu Mukherjee: The success of CCTS depends on its design and enforcement. It must function as a price discovery sys - tem, with well-defined emission caps, institutional oversight, and a transparent trading exchange. It should be compliance-based, ensuring accountability, but also flexible enough to enable innovation and investment. If designed right, CCTS can become a cornerstone for India’s low-carbon industrial future — aligning economic efficiency with environmental responsibility. energetica INDIA- November_2025 25 INTERVIEW