The Prime Minister’s Office and government think tank NITI Aayog didn’t immediately respond to emails seeking comment.
The market would initially be limited to hard-to-abate sectors, allowing participants to trade credits earned from cutting emissions, the people said.
One of the goals is to ensure state-owned energy firms like Oil & Natural Gas Corp., Indian Oil Corp. and NTPC Ltd., as well as steel and cement companies, can benefit from planned investments in carbon-capture projects, they said.
India’s proposed market follows a similar one in China, which last year launched a mandatory trading system for all large power plants. But the market has been plagued by delays and problems with data collection, and has seen only lackluster buying and selling of allowances.
A detailed plan for establishing the carbon market is likely to be ready in the fourth quarter, the people said.
India is also looking to introduce methanol-blended fuels in land and marine transport, build more carbon capture projects, and encourage the adoption of electric vehicles as part of its climate goals, they said.
The carbon-market plan was previously reported by the local Mint newspaper.