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Carbon credit market in India turns emissions into accountability
Introduction
An invisible line is being drawn across the Indian industry: beat an emissions target and carbon performance can create value; miss it, and the gap can carry a cost. That is the shift powering the carbon credit market in India, as climate performance moves from sustainability reports into decision-making.
What makes this moment interesting is the machinery behind it. Rules are turning into targets, projects, methodologies, registries, and digital infrastructure. Carbon credit trading in India is becoming less about policy ambition and more about execution. This blog looks inside that transition, how it works, and what it could unlock next.
How has India’s carbon market evolved into an operating ecosystem?
India's carbon market timeline: From policy to implementation
The carbon credit market in India has evolved rapidly from a regulatory framework into an emerging ecosystem for compliance and project-based participation.
2023: The national framework is created
The Ministry of Power notified the CCTS (Carbon Credit Trading Scheme) on 28 June 2023. A December amendment formally introduced the offset mechanism, allowing non-obligated entities to register eligible projects and generate Carbon Credit Certificates.
2024: The operating rules take shape
BEE (Bureau of Energy Efficiency) published the detailed procedure for the compliance mechanism and established accreditation criteria for agencies responsible for independently validating and verifying emissions data and project outcomes.
2025: Targets and offset procedures move forward
BEE published the detailed procedure for the offset mechanism. In October, MoEFCC notified the first Greenhouse Gas Emission Intensity targets for 282 obligated entities across aluminium, cement, chlor-alkali, and pulp and paper.
2026: The market enters phased implementation
In January, another 208 obligated entities were added, taking the total to 490. The Indian Carbon Market Portal was launched in March, when more than 40 entities were submitting projects. By 7 July 2026, BEE listed 12 approved offset methodologies.
The launch of the portal also marks an important step towards building the infrastructure required for carbon credit trading in India. Together, these milestones show how the Indian carbon market has progressively moved from framework development towards implementation.
India’s carbon market at a glance
1. Key scale indicators
India’s carbon market currently covers 490 obligated entities across 7 energy-intensive sectors, making it one of the most structured compliance-based carbon systems in the developing world.
2. Market design and infrastructure
The system operates through 2 core mechanisms: a compliance mechanism for obligated industries and an offset mechanism for voluntary participation. Supporting this structure, the government has approved 12 carbon offset methodologies spanning energy, industry, waste, agriculture, and forestry.
3. Early participation signals
Market activity began even before full operational maturity, with over 40 entities submitting offset projects by March 2026, reflecting early confidence in the framework.
4. Platform rollout
The Indian Carbon Market Portal, launched in March 2026, provides a central digital platform for implementing and administering the market. It supports key processes such as entity registration, project tracking, certificate issuance, and registry management under the CCTS, strengthening the infrastructure needed for a transparent and traceable carbon market.
| Parameter | Compliance mechanism | Offset mechanism |
|---|---|---|
| Primary purpose | Reduce the greenhouse gas emission intensity of notified energy-intensive industries | Enable eligible projects to generate Carbon Credit Certificates through verified emission reductions, avoidance, or removals. |
| Who participates? | Obligated entities in sectors notified under the CCTS (Carbon Credit Trading Scheme). | Non-obligated entities undertaking eligible offset projects. |
| Nature of participation | Mandatory for entities brought under notified GHG emission intensity targets. | Voluntary, subject to project eligibility and CCTS requirements. |
| How it works | Each obligated entity receives a GHG emission intensity target based on emissions per unit of output. | Projects establish an approved baseline and demonstrate measurable emission reductions, avoidance, or removals against it. |
| How certificates are earned | Entities that outperform their notified emission intensity targets become eligible to receive Carbon Credit Certificates. | Eligible projects can receive certificates after meeting the applicable methodology, monitoring, validation, and verification requirements. |
| What happens if requirements are not met? | Entities that miss their targets must purchase and surrender certificates equivalent to the shortfall. | Projects that fail to meet methodology or verification requirements do not qualify for certificate issuance. |
| Role of trading | Better-performing entities can sell certificates to entities requiring them for compliance. | Certificates generated by eligible projects can enter the carbon market subject to the prescribed CCTS issuance and trading framework. |
| Basis of assessment | Performance against notified GHG emission intensity targets. | Performance against an approved project baseline and methodology. |
| Validation and verification | Emissions and performance are assessed under the procedures prescribed for the compliance mechanism. | Projects undergo independent validation and verification before certificates can be issued. |
| Current coverage | 490 obligated entities across notified energy-intensive sectors as of January 2026. | 12 approved methodologies across energy, industry, waste, agriculture and forestry as of 7 July 2026. |
| Examples | Aluminium, cement, chlor-alkali, pulp and paper, petroleum refineries, petrochemicals, textiles and secondary aluminium. | Renewable electricity, green hydrogen, industrial energy efficiency, fuel switching, landfill methane recovery, compressed biogas, improved rice cultivation, livestock methane recovery, biomass energy, afforestation and reforestation. |
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Bottomline
India has built the foundations for a market that can connect industrial decarbonization with measurable economic value. As the carbon credit market in India matures, its success will depend on whether credible climate outcomes remain at the center of every certificate issued and traded. Carbon credit trading in India can strengthen that link by rewarding better performance and supporting investment in lower-emission pathways.
The next chapter of the Indian carbon market is therefore not just about scale, but about trust, participation and impact. If those grow together, India can build a market that moves climate ambition meaningfully forward.
Your sustainability goals deserve an action plan that delivers
Frequently asked questions
The frequently asked questions section is a reliable source for unlocking answers to some of the most crucial inquiries. Please refer to this section for any queries you may have.
- Solaroof
The carbon credit market in India is governed through a shared institutional framework. The Ministry of Power notified the CCTS, while the Ministry of Environment, Forest and Climate Change notifies greenhouse gas emission intensity targets. BEE administers the scheme, develops procedures, and issues carbon credit certificates. Grid Controller of India operates the registry, while CERC regulates certificate trading. The National Steering Committee oversees the overall functioning of the Indian Carbon Market.
For entities exploring how to trade carbon credits in India, the process begins only after eligible certificates are issued and credited to the official registry. From there, trading follows a structured registration and exchange-based route under CERC rules.
- Register with the ICM Registry to ensure Carbon Credit Certificates are credited to the entity’s registry account and obtain a Certificate of Registration
- Register with an approved Power Exchange to trade certificates in line with CERC-approved rules, business rules and exchange bye-laws governing transactions.
The Carbon Credit Trading Scheme (CCTS) provides the regulatory framework for India’s carbon market and was notified by the Central Government in June 2023. It establishes the governance and processes for registration, verification, issuance, and trading of Carbon Credit Certificates through compliance and offset mechanisms. In effect, the CCTS defines how carbon credit trading in India is administered and how participating entities can earn, purchase, or use certificates.
Participation in India’s carbon market depends on the applicable CCTS mechanism. Notified energy-intensive industries participate as obligated entities under the compliance mechanism and must meet prescribed greenhouse gas emission-intensity targets. Non-obligated entities can participate through eligible offset projects that reduce, avoid, or remove emissions and may seek Carbon Credit Certificates after meeting prescribed requirements. Registered non-obligated entities can also purchase certificates voluntarily under the framework.
Yes. Under BEE’s compliance procedure, unused Carbon Credit Certificates from a completed compliance cycle can be banked for later cycles. Certificates originally issued to an obligated entity may be sold in the Indian carbon market or used for future compliance. However, banked certificates that were purchased from the market can only be used to meet compliance requirements in subsequent cycles, rather than being resold.
A successful trade triggers a registry update, not just an exchange transaction. The Power Exchange reports the executed trade to the Registry after the dealing session. The seller’s registry account is then debited by the number of certificates sold, and the buyer’s account is credited. This creates a central ownership record and helps keep certificate balances aligned with completed transactions across the market.
No. CERC’s 2026 regulations provide for two separate segments within the Indian carbon market. The compliance market is designed for obligated entities, while the offset market covers non-obligated entities. BEE also categorizes carbon credit certificates for the two groups. Keeping the segments separate preserves their different regulatory purposes while allowing both to use the wider registry and Power Exchange infrastructure established under the CCTS.
There is no single fixed price for Carbon Credit Certificates. Within the carbon credit market in India, prices will be discovered on the relevant Power Exchange through a CERC-approved process. For the compliance market, trading must also stay within a floor price and a forbearance price approved by CERC on BEE’s proposal. CERC may intervene if prices show abnormal movement or sudden volatility.
Sources
1. Carbon Supports open access
2. Carbon Market
3. Carbon Credits: What They Are, How They Work, and Who Buys Them
4. What are carbon markets and how do they work?
5. Understanding Carbon Credits & their role in Climate Action
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