India is at the forefront of a crucial global shift towards combating climate change while driving economic growth. With aspirations to become the world’s third-largest economy by 2030, India faces the challenge of decoupling its economic progress from carbon emissions. Currently, India is the third-largest emitter of greenhouse gases (GHG) but maintains low per-capita emissions compared to the global average. Recognizing its moral responsibility, India has set ambitious targets, including carbon neutrality by 2070.
To achieve these goals, India has introduced several initiatives under the ESG (Environmental, Social, and Governance) framework. The Carbon Credits Trading Scheme (CCTS) is a key part of this strategy, aimed at leveraging climate finance and low-cost climate technologies for sustainable development. The CCTS, a unified Indian Carbon Market (ICM), will enable the trading of carbon credit certificates, helping reduce GHG emissions. Obligated entities will have GHG emission intensity targets and can receive or purchase carbon credit certificates based on their performance.
India currently operates two market-based emission reduction schemes—the Perform, Achieve and Trade (PAT) scheme and the Renewable Energy Certificates (REC) system. The introduction of the national carbon market will add an additional avenue for trading carbon certificates, making India the second-largest source of carbon offsets globally.
The CCTS allows non-obligated entities to participate in the carbon credits market, with the compliance segment scheduled to commence in 2025-26. The platform will attract investments and technology in emerging sectors such as green hydrogen, sustainable aviation fuel, and offshore wind. The Bureau of Energy Efficiency (BEE) will administer the scheme, ensuring the quality and credibility of carbon credits through strict monitoring and verification processes.
For private players, the CCTS offers a dual benefit—compliance with government-set emission limits and an additional revenue stream through carbon credits. This presents a lucrative opportunity for Indian enterprises to tap into the global carbon trading markets.
In conclusion, India’s carbon market reforms represent a significant stride towards sustainable development. By ensuring the integrity and quality of carbon credits, India can effectively mitigate climate change while fostering economic growth and innovation. For a deeper understanding, the report “Carbon markets as a tool for climate financing: The India Story” provides comprehensive insights into the policy landscape and necessary interventions for India’s carbon market.
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