The government plans to develop the Indian Carbon Market (ICM) where a national framework will be established with an objective to decarbonise the Indian economy by pricing greenhouse gas (GHG) emission through trading of the Carbon Credit Certificates. The Bureau of Energy Efficiency, Ministry of Power, along with the Ministry of Environment, Forest & Climate Change are developing the Carbon Credit Trading Scheme for this purpose.


As India currently has an energy savings-based market mechanism, the new Carbon Credit Trading Scheme will enhance the energy transition efforts with an increased scope that will cover the potential energy sectors in India. For these sectors, GHG emissions intensity benchmark and targets will be developed, which will be aligned with India’s emissions trajectory as per climate goals. The trading of carbon credits will take place based on the performance against these sectoral trajectories. Further, it is envisaged that there will be a development of a voluntary mechanism concurrently, to encourage GHG reduction from non-obligated sectors.


The ICM will develop methodologies for estimation of carbon emissions reductions and removals from various registered projects, and stipulate the required validation, registration, verification, and issuance processes to operationalize the scheme. Monitoring, Reporting, Verification (MRV) guidelines for the emissions scheme will also be developed after consultation. A comprehensive institutional and governance structure will be set up with specific roles of each party involved in the execution of ICM. Capacity building of all entities will be undertaken for up-skilling in the subject matter.


The ICM will mobilise new mitigation opportunities through demand for emission credits by private and public entities. A well-designed, competitive carbon market mechanism would enable the reduction of GHG emissions at the least cost, both at the level of entity, as well as the overall sector and drive faster adoption of clean technologies, in a growing economy like India.


India has been at the forefront of climate action to meet the climate goals through its ambitious Nationally Determined Contributions (NDC). To facilitate the achievement of India’s enhanced climate targets and to meet the future goals, the government is developing the ICM. By accelerating the transition to a low carbon economy, the ICM aims to facilitate the NDC goal of reducing Emissions Intensity of the GDP by 45 percent by 2030 against 2005 levels.

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