India plans to start trading energy efficiency credits, which could curb carbon-dioxide emissions growth and develop into a 740 billion rupee ($16 billion) market by 2015, a government official said.

The South Asian nation is setting up a system that will assign targets for businesses to improve energy efficiency, allowing companies that exceed the goals to earn credits for their savings and sell them to those that don’t, Bureau of Energy Efficiency director-general Ajay Mathur, said today in Mumbai.

India, the fourth-largest emitter of gases blamed for global warming, plans to cut its carbon intensity, or the amount of carbon dioxide released per unit of gross domestic product, by as much as 25 percent from 2005 levels by 2020. Asia’s third- biggest energy consumer and the U.S., China and Brazil were among countries that declared plans to slow emissions at the climate talks last month in Copenhagen.

The government expects to set efficiency targets for companies by the end of March and is talking with Indian Energy Exchange Ltd. and Power Exchange India Ltd., the country’s two power exchanges, to set up trading protocols, Mathur said.

The government unveiled a plan in April aimed at saving the equivalent of 23 million metric tons of oil by 2015 by encouraging power-intensive industries and businesses to reduce their consumption through energy efficiency measures.

The National Mission on Enhanced Energy Efficiency intends to avoid power capacity additions of 19,000 megawatts that would otherwise be needed to meet demand and also curb carbon dioxide emissions growth by 98 million tons annually, or 10 percent of the current discharge, according to power ministry estimates.

The government will reimburse as much as 50 percent of unpaid bank loans given to companies that seek to invest in energy efficiency projects, Mathur said in an interview at the venue of a conference.

“Banks are unwilling to lend to energy efficiency because it’s not a business model they do,” Mathur said. “To increase the comfort of financial institutions to lend for energy efficiency, we are creating a partial risk guarantee fund.”

The energy efficiency bureau is talking to State Bank of India, the nation’s biggest lender, HSBC Holdings Plc and PTC India Ltd. to provide loans for energy efficiency projects, he said.