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OpinionJayant Sinha
4 min
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12 Feb 2025, 02:00 PM
ISTIf India positions itself strategically, it can emerge as a preferred export hub for green technologies. (AP)The economic case for sustainability is clear and a green transition has capital market backing for good reason. A policy reversal in the US should nudge us to speed up our own efforts.
As Donald Trump begins his second term as US president, the world is bracing for a dramatic shift in US climate policy. His first presidency was marked by a withdrawal from the Paris Agreement, a regulatory rollback on emissions and a strong embrace of fossil fuels. His successor Joe Biden rejoined the commitment made in Paris, where leaders of nations had come together in 2015 to “pursue efforts” to contain global warming, key among them being to set up country-level emission-reduction targets.
Now, with Trump back in the White House, early indications suggest an even more aggressive dismantling of climate priorities. One of his first actions was to exit the Paris deal, which according to the rules will take a year to implement. This has direct implications for climate action—especially in India and the Global South.Also Read: Climate Change and the New Green Economy: The big questions for 2025The voluntary carbon-credit market has long been a vital mechanism for financing climate action in emerging economies. Under the Biden administration, the US actively participated in strengthening carbon markets, pushing for corporate net-zero commitments and regulatory clarity.
Trump, however, has historically dismissed carbon trading as an unnecessary burden on businesses. If his administration dismantles carbon pricing mechanisms or weakens US participation in international carbon markets, it could significantly depress carbon credit prices.
India, a leading supplier of high-integrity carbon credits through projects in renewable energy, forestry and carbon sequestration, could see diminished demand. This will particularly hurt small-scale sustainability projects that rely on carbon finance to stay viable.
However, India’s own compliance carbon market is maturing. The Bureau of Energy Efficiency’s Perform, Achieve, Trade (PAT) scheme and the upcoming Carbon Credit Trading Scheme (CCTS) are designed to support domestic demand.
To counteract volatility, India must strengthen intra-regional trade in carbon credits, aligning with overseas partners like the EU, Japan and Australia—economies that remain committed to climate goals despite the US withdrawal.
Trump’s protectionist trade policies could further disrupt green technology markets. During his previous term, he imposed tariffs on solar panels from China, creating ripple effects across global supply chains. Biden increased these tariffs and Trump has now further hiked tariffs by an additional 10%.Also Read: Ajit Ranade: Trump’s policies offer India a pretext to