Representation of Indian Carbon Market

India’s Carbon Market: A Promising Future for Climate Action?

Taking a look at the carbon market in India and its expected future

Climate change is undeniably one of the biggest threats we face today, and combating it requires innovative solutions. Enter the carbon market – an intriguing concept that has gained momentum worldwide. The carbon market is a system where businesses and governments buy and sell credits for emitting greenhouse gases. The market sets a price for carbon, which creates an incentive to reduce emissions.

Carbon markets can either be compliant or voluntary. Compliance markets are formally governed by laws at the national, regional, and/or worldwide levels. Today’s compliance markets primarily follow a concept known as “cap-and-trade” [6]. Whereas, in voluntary carbon markets emitters like businesses, people, and others purchase carbon credits to compensate for the release of one tonne of CO2 or similar greenhouse gases. These carbon credits are produced through actions that remove CO2 from the atmosphere, like reforestation [6].

International carbon markets can be crucial in achieving cost-effective global greenhouse gas emission reductions. The number of emissions trading systems is rising globally. The United States, Canada, China, Japan, New Zealand, South Korea, and the EU ETS are just a few of the countries that have national or subnational systems running or in the works [4]. The market for carbon rose 13.5% in 2022, reaching a new high of 865 billion euros. This expansion was primarily brought on by an uptick in the demand for carbon permits, which resulted in skyrocketing costs [2]. Based on revenue, the European Union Emission Trading System is the largest carbon market; in 2022, it represented over 87% of the total market size.

In India, with its booming economy and increasing greenhouse gas emissions, how would the carbon market play a role in combating climate change? In this blog, we delve into the potential of India’s carbon market, exploring its promises and future in order to meet the sustainable goals of India.

India’s Carbon Market – Carbon Credit Trading Scheme

The carbon market in India is still in its early stages of development, but it holds great promise for climate action. The market allows businesses and individuals to offset their emissions by investing in projects that reduce greenhouse gas emissions. In return, they receive carbon credits that can be used to offset their own emissions or traded on the open market. India has issued 35.94 million carbon credits between 2010 and 2022 and has also traded these credits on overseas markets [5].

The Government of India has been taking steps to establish a carbon market in the country.

The most recent update was, in 2023, when the union government sanctioned the establishment of the first domestically regulated carbon market in India [1]. The goal of the Indian government’s development of the Indian Carbon Market (ICM), which would establish a national framework, is to decarbonize the Indian economy by pricing Greenhouse Gas (GHG) emissions through the trade of Carbon Credit Certificates [3]. The Carbon Credit Trading Scheme is being developed for this purpose by the Ministry of Power’s Bureau of Energy Efficiency in collaboration with the Ministry of Environment, Forestry, and Climate Change. The plan calls for the establishment of a “National Steering Committee,” a technical committee, an accredited carbon verification agency, and the Central Electricity Regulatory Commission (CERC), which will act as the market regulator for carbon emissions [1]. By 2025 it is anticipated that  Renewable Energy Certificates (REC) and Energy Savings Certificates (ESC) will be traded, and by 2026 these will be changed to Carbon Credit Certificates.

Through the creation of a domestic registry and integration with power markets, the recently announced carbon credit trading plan would usher in a new era to restore the trading of emissions, CMAI (Carbon Market Association Of India) President Manish Dabkara, Chairman and MD of EKI Energy Services, states that “Taking a cue from its Paris Agreement commitment and chasing its NetZero goal, Government of India in consultation with the Bureau has released the Carbon Credit Trading Scheme (CCTS) for the institutionalisation and functioning of the Indian Carbon Market (ICM). It involves a process for compliance in which emission objectives will be established for specific industries and organisations, surpassing which they will receive credit certificates” [7].

The energy transformation initiatives will be strengthened by the new avatar Carbon Credit Trading Scheme, which will broaden their scope to include India’s potential energy sectors. In order to meet the climate goals, GHG intensity benchmarks and targets will be created for these sectors and will be in line with India’s emissions trajectory [3]. Based on how well these sectoral trajectories are doing, carbon credits will be traded. Additionally, it is anticipated that a voluntary system will be developed concurrently to stimulate GHG reduction from non-obligated industries. Through the purchase of emission credits by both public and private enterprises, the ICM will activate new mitigation alternatives.

However, the notification did not list the activities that would qualify under the carbon trading plan. “The Ministry of Power will advise notifying the Ministry of Environment, Forestry and Climate Change (MoEFCC) of greenhouse gas emission intensity targets. The accountable parties are required to reach the targets for greenhouse gas emission intensity. The announcement stated that the obligated companies “shall also be required to get any other targets, such as usage of non-fossil energy or specific energy consumption, as may be declared by the Ministry of Power under the Act as amended from time to time [1].

The Future of the Carbon Market in India

Industry insiders predicted that the $2 billion voluntary carbon credit market in India may grow to $200 billion by 2030 [1]. India is one of the biggest exporters of carbon credits, yet it lacks its own carbon market. Although there are a few carbon offsetting sites that offer carbon credits, there isn’t yet a market that is regulated [1].

In the past decade, there have been many carbon market initiatives launched in India. It is difficult to predict the future of any given market, and this is especially true for nascent markets like carbon. There are a number of factors that could affect the future development of the carbon market in India, including political stability and economic growth.

Political stability is an essential factor to consider when predicting the future of any market. Political turmoils will make it difficult for businesses to operate and thus create uncertainty about the policy environment. Such situations could hamper the development of the carbon market in India.

Economic growth is another important factor to consider when predicting the future of a market. A growing economy usually leads to increased demand for commodities, including carbon credits. With India’s growing economy and a larger number of businesses coming up, the demand for carbon credits could potentially increase.

India’s transition to a low-carbon economy

The benefits of having a carbon market in India are many. For one, it would create incentives for businesses to invest in green technologies and practices that lower their emissions. It would give Indian businesses a way to offset their emissions if they are unable to reduce them enough on their own. There will be challenges that India could face when it comes to the regulation of this carbon market and tackling these issues would take solid and structured guidelines.

A carbon market would send a strong signal to the international community that India is serious about tackling climate change. This could attract more foreign investment and help India transition to a low-carbon economy.


  1. Standard, B. (2023). Centre approves formation of India’s first domestic regulated carbon market. Accessed July 10th 2023
  2. Ian Tiseo, & 10, J. (2023, July 10). Global Carbon Market Size 2022. Statista.,which%20culminated%20in%20surging%20prices. Accessed July 14th 2023
  3. Ministry of Power & Ministry of Environment, forests & climate change to develop Carbon Credit Trading Scheme for decarbonisation. Press Information Bureau. Accessed July 10th 2023
  4. International Carbon Market. Climate Action. Accessed July 14th 2023
  5. (2023, March 28). Carbon credit: Understanding the concept, its evolution and implications – ET energyworld. Accessed July 14th 2023
  6. Munjal, D. (2023, January 26). Explained: What are carbon markets and how do they operate? Accessed July 14th 2023
  7. Business Today. (2023, July 3). Govt finalises scheme for Indian Carbon Market, Steering Committee to be formed. Accessed July 16th 2023
Exploring the Role of Verified Carbon Standard (VCS) and Gold Standard in India's Efforts to Combat Climate Change.

From VCS to Gold Standard: A Dive into Carbon Credit Standards and Registries in India

Exploring the Role of Verified Carbon Standard (VCS) and Gold Standard in India’s Efforts to Combat Climate Change.

“Carbon, the currency of a new world order” (Paul Kelly, The Australian, 21 March 2007

Greenhouse gases, such as CO2, act as heat trappers, resulting in the “greenhouse effect” that ultimately warms the environment.  In 2019 alone humans dumped 36.44 billion tonnes of  CO2 which will be trapped in the atmosphere for centuries, increasing the global temperature higher than it was in at least 3 million years”. [9]  In the ‘Special Report by IPCC 2018’, it is stated that human activities are the major causes of a 1.0°C increase in global temperatures above pre-industrial levels. According to the report, if the current rate of increase continues, it is likely that global temperatures will reach 1.5°C between 2030 and 2052, considering the available technologies for assessment.”[8]

As consumers and businesses around the globe are choosing environmentally friendly practices with the latest sustainable technologies.  Promoting new technologies and novel business models and markets is a need of the hour to achieve climate change targets.  As countries and businesses strive to reduce their carbon footprints, there is a need for a market tool that allows them to create and trade carbon credits. Carbon Credits are measurable, verifiable and tradable permits given to climate action projects. In addition to reducing greenhouse emissions from the atmosphere, these initiatives also empower people, safeguard ecosystems, revive forests, and reduce dependency on fossil fuels, among a host of other good outcomes. They are used as a mechanism to reduce greenhouse gas emissions by allowing organisations or individuals to offset their emissions by purchasing credits from projects that reduce or remove greenhouse gases from the atmosphere.
Carbon dioxide (CO2) emissions have an adverse effect on the environment and contribute to climate change, which is the foundation of the carbon credits. By creating a market for carbon credits, businesses and governments promote the advancement of renewable energy, energy efficiency, and other low-carbon technology.[2] With the current state of global climate change, carbon credits are becoming more and more significant.  The article will explore the two major carbon credit standards available.

Introduction to Carbon Credit Standards

Carbon credit standards are a set of guidelines and criteria used to measure, verify, and certify greenhouse gas (GHG) emissions reductions or removals achieved through carbon offset projects. These standards ensure that the carbon credits generated by these projects are real, additional, permanent, measurable, and verifiable.[1]  Globally the certificates and regulations to govern the market are done through third parties. In a few nations governments also have boards, programmes and laws to govern the market. In India, based on the Clean Development Mechanism, the CCSI(Carbon Credit Standards of India),  provides a framework for businesses and organisations to measure, manage, and offset their carbon footprint by investing in renewable energy projects or implementing energy-efficient technologies. The CCSI is administered by various bodies in India, including the Ministry of Environment, Forest and Climate Change (MoEFCC), the National Accreditation Board for Certification Bodies (NABCB), and the Quality Council of India (QCI).
It is astonishing that the global carbon credit markets have increased 164% according to 2021 estimates. “It is also anticipated that the market valuation for carbon credits globally would reach $100 billion by the end of 2030.” [13] According to an article published in TOI by Bose Varghese, stated that in 2021 the voluntary carbon credit market globally reached the $ 1 billion mark and is expected to grow $50-$190 billion by 2030, closely achieving the 2030 target of ‘Net Zero’.[11]

Many carbon credit programmes have their own standards that serve as guidelines and criteria for projects utilising their system. Two such globally recognized standards  are VCS  and Gold Standards which  “together commands more than 80% of credits being issued by voluntary standards.”[6]

Understanding Verified Carbon Standard (VCS)

This standard was developed in 2005 by the Climate Group and the International Emissions Trading Association (IETA). Through projects, it provides real, quantifiable, distinctive, and long-term carbon reductions. Credits are managed via registries, which are used to register, transfer, and retire Voluntary Carbon Units (VCUs). The VCS does not place greater attention on initiatives that are socially and environmentally beneficial, instead concentrating primarily on climate integrity and GHG emission reduction.[3] The project must be GHG approved, in accordance with ISO 14065:2007, in order to qualify for carbon credits under VCS.

It categorises the projects into three:

  • Micro projects: under 5,000 tCO2e per year
  • Projects that reduce: 5,000–1,000,000 tCO2e per year
  • Megaprojects: greater than 1,000,000 tCO2e per year [4].

The VCS encompasses a variety of project types, including those involving industrial and agricultural operations, renewable energy, energy efficiency, afforestation, and reforestation. Companies, governments, and people that want to offset their carbon emissions can purchase the carbon credits produced by these projects on the voluntary carbon market. All projects that are registered are subject to rigorous auditing by VCS members, and a third party evaluates the accuracy of emission reduction calculations in compliance with ISO 14064-3:2006 standards. Following the International Carbon Reduction and Offset Alliance (ICORA) code of conduct and being the most popular GHG crediting programme in the world, VCS has effectively eliminated 1.1 billion tonnes of GHG from the atmosphere [12].

In May 2023, the CEO of Verra, David Antonioli, stepped down following an investigation conducted by The Guardian, Die Zeit, and SourceMaterial. The investigation raised concerns about the effectiveness of rainforest credits issued by Verra, which were utilised by major corporations such as Disney, Shell, and Gucci. It found that some of these credits were based on the protection of rainforests that were not genuinely at risk. The investigation also highlighted instances of forced evictions related to a Conservation International-operated project in Peru.[16]

In response to these findings, Verra has announced its plans to implement new regulations for the production of carbon credits from tropical rainforests. It is expected that all projects will be required to adhere to the new methodology by mid-2025. Subsequently, some companies, including Gucci, have made the decision to remove carbon neutrality claims associated with offsetting projects from their websites.[16]

Gold Standard for Carbon Credits

Launched in 2003 under the leadership of the World Wildlife Fund, HELIO International and South North NGOs as a voluntary carbon offsets program. This standard verifies projects that take into account holistic development (environment, social and community economy) aspects. Projects that successfully satisfy strict requirements for GHG reduction, sustainable development, and stakeholder participation are given the Gold Standard accreditation. In this changing market Gold Standards ensures that projects must be resilient, and relevant and can change themselves according to the changing policies. This standard’s flexibility in allowing users to select between carbon credits and additional certification options, such as certified emission reduction declarations, might be an intriguing feature for project developers looking to reduce the possibility of double counting.[7]
With $36 billion of shared value creation GS currently has 2900 ongoing projects in over 100 countries. The completed projects have in total successfully reduced 308 million tons of CO2.[7]

By the end of 2022, Gold Standard will have distributed a total of 238 million carbon credits, with 98.2 million credits coming from projects located in the Asia-Pacific region and the remaining credits distributed across over 100 nations.

The Indian Need for Standardised Carbon Credit System

As a significant exporter and producer of carbon credits India plays a crucial role in the global carbon credit market. It issued 278 million credits in the voluntary market which is 17% of the global supply.[13] This brings us to the need for an Indian standard for a carbon credit system which will help India to avert a loss of $35 tn owing to unmitigated climate change over the next 50 years. [14]

Currently, Indian carbon credits earned through CDM  (Clean Development Mechanism) are traded in the international carbon market. To achieve its goal of becoming carbon neutral by 2070, India does not have an official standard or market for domestic carbon trading. As there is an increase in Indian industries participating in carbon offsetting initiatives, a standardised verifying system would ensure transparency and credibility in assessing and validating carbon credits. This system would enable accurate quantification of emission reductions, facilitating the trading and utilisation of carbon credits both domestically and internationally.

The Energy Conservation (Amendment) Bill 2022, is one of the bills which state the carbon trading schemes, providing the power to the central government to regulate and specify such schemes. In March 2023 the Ministry of  Power proposed a draft. A blueprint that states the Bureau of Energy Efficiency will in addition to serving as secretariat for the Indian Carbon Market Governing Board (ICMGB), will carry out a number of duties, such as creating procedures and standards for registering projects under a voluntary system and formulating goals and objectives for the organisations covered by the compliance mechanism. Additionally, the Bureau will create market stability mechanisms for carbon credits and issue Carbon Credit Certificates (CCC).[15] Abhay Bakre, the director general of  the Bureau of Energy Efficiency, states that “India is on course to announce the details of a national carbon market scheme in June, with each element of the market to be consulted and finalised before trading could start by 2025”[13]

As carbon credit becomes a medium to capitalise the climate offsets projects and enhances the economy and environment. What are your thoughts on the importance of standardisation of the carbon credit system for Indian offset projects? Write to us at and let us know!

List of references

  1. Climate Focus (2022) Chapter 7: What is the role of carbon standards in the voluntary carbon market?, Available at:,credits%20are%20generated%20and%20issued.%20(Accessed:%2001%20May%202023).
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  1. Carbon Offset Guide (2020) Protocols & standards, Carbon Offset Guide. Available at: (Accessed: 19 May 2023).
  1. Anja Kollmuss, Helge Zink & Clifford Polycarp (2008) GCP : Global Carbon Project : Homepage. Available at:
  2. Chacko, M. (2022) Carbon credits: An overview – renewables – india, Carbon Credits: An Overview – Renewables – India. Available at: (Accessed: 01 May 2023).
  2. The Gold Standard Grow to zero conference, The Gold Standard. Available at: (Accessed: 25 May 2023).
  1. IPCC (2018) Summary for policymakers, Global Warming of 1.5 oC. Available at: (Accessed: 24 May 2023).
  1. 25, S.F. |February et al. (2021) How exactly does carbon dioxide cause global warming?, State of the Planet. Available at:,contributing%20to%20the%20’greenhouse%20effect. (Accessed: 25 May 2023).
  1.  Chandaria, K. et al. (2021) The next generation of climate innovation, BCG Global. Available at: (Accessed: 24 May 2023).
  1. Singh, R. (2023) India may announce details of National Carbon Market Scheme in June: Official, S&P Global Commodity Insights. Available at: (Accessed: 28 May 2023).
  1.  Confederation of Indian Industry (2023) Indian Carbon Credit Market, Available at:,carbon%20market%20credits%20issued%20globally. (Accessed: 01 May 2023).
  1.  Pandey , K. (2023) India prepares for a domestic carbon market with release of a draft carbon trading scheme, Mongabay. Available at: (Accessed: 02 May 2023).
  1. Greenfield, P. (2023) CEO of Biggest Carbon Credit Certifier to resign after claims offsets worthless, The Guardian. Available at: (Accessed: 05 June 2023).