In June, last year, the Union government launched the Indian Carbon Market (ICM) framework to enable the trading of carbon credits which was aimed at reducing greenhouse gas (GHG) emissions and facilitate achievement of India’s Nationally Determined Contribution (NDCs).
The framework, known as Carbon Credit Trading Scheme (CCTS), was officially notified through a vide notification S.O. 2825(E) dated June 2023 and amended notification S.O. 5369(E) dated December 2023.
CCTS so far
A list of 10 sectors was approved for the Offset Mechanism under the CCTS under an office memorandum by the Bureau of Energy Efficiency dated 10 September 2024. Out of these, six sectors belong to Phase 1, for which 12 methodologies have been developed by the Bureau in their latest document.
The 12 methodologies were published on January 23, 2025 for which comments are being sought by 30th January.
The offset mechanism is a voluntary, project-based system designed for non-obligated entities to register their projects aimed at reducing, removing, or avoiding GHG emissions.
These projects can earn Carbon Credit Certificates (CCCs) based on their performance against a baseline. This mechanism allows countries to capture mitigation opportunities in sectors not covered by compliance mechanisms, thereby incentivising action in these areas.
Non-obligated entities (entities not covered under the compliance mechanism) can register their projects and earn CCCs once they meet eligibility requirements outlined by the Bureau of Energy Efficiency. Each project must be approved following a detailed procedure, which involves a project cycle that all projects must undergo before they are eligible to receive CCCs.
New offset methodologies
The latest document introduces different methodologies, lists typical projects under the methodology, type of GHG mitigation actions, scope and applicability of the project along with dates for methodology approval . The document details the methodology in two components – baseline and monitoring.
Presently, the methodology approval dates have not been mentioned and marked in yellow. It is expected that the dates will be updated with the adoption of the document.
These methodologies cover a range of sectors, from energy production and industrial efficiency to waste management and transportation as listed in the below table. Moreover, the methodologies have been adapted from the existing UNFCCC Clean Development Mechanism (CDM) methodologies.
It is understood from stakeholder consultations with the Bureau that the projects under these sectors have high demand in the country and many of these projects are also high impact projects. For instance, energy projects make up for 83 per cent of the total projects under CDM and Voluntary Carbon Market in India while industrial projects stagger around seven per cent
Construction, fugitive emissions, solvent use and CCUS are the four sectors to be covered under phase 2 for which methodologies are yet to be detailed.
