An offset mechanism is a voluntary system where entities can compensate for greenhouse gas emissions by investing in projects that reduce, remove, or avoid emissions elsewhere, earning carbon credits.
The framework approved by the government enables businesses, industries, and organizations-particularly those not covered under the compliance mechanism-to participate in climate action and receive carbon credits for verified emission reductions.>
“This marks a major step forward in the operationalization of the Offset Mechanism under ICM [Indian Carbon Market],” the power ministry said in a statement on Friday.
The government notified the Carbon Credit Trading Scheme in June 2023, and laid the foundation for the Indian Carbon Market. It had established the institutional framework, including the National Steering Committee for Indian Carbon Market.
In December 2023, the scheme was amended to introduce the ‘offset mechanism’, enabling participation from non-obligated entities through voluntary climate mitigation projects. The offset mechanism will encourage voluntary participation by entities for developing projects that reduce, remove, or avoid greenhouse gas emissions. The mechanism will enable our country to tap climate change mitigation from sectors not covered under the compliance mechanism and can incentivize actions in such sectors.
The approved methodologies are expected to support a wide range of climate-friendly projects for voluntary carbon credit generation.
