New Delhi: India’s recent approval of eight methodologies for its domestic voluntary carbon market is expected to improve credit quality and lead to a rise in carbon offset prices, according to research firm Wood Mackenzie.
“India’s new methodologies could potentially boost the quality and credibility of its carbon offsets. This move may lead to an upward pressure on prices, narrowing the gap with neighbouring countries,” said Fernanda Abarzúa, senior research analyst, carbon at Wood Mackenzie.
The methodologies, formalised under the Carbon Credit Trading Scheme (CCTS), provide a framework that may influence pricing, quality, and trading dynamics of carbon credits in the country. The move allows international trading of Carbon Credit Certificates (CCCs) under Article 6.2 of the Paris Agreement and expands credit generation opportunities to non-obligated sectors.
India has over 5,000 carbon offset projects registered across four international registries—the Clean Development Mechanism (CDM), the Verified Carbon Standard (VCS), the Gold Standard Registry (GSR), and the Universal Carbon Registry (UCR).
In the first quarter of 2024, India’s average carbon credit price was US$2.35 per tonne of CO₂, compared to Sri Lanka (US$3.77), Bangladesh (US$4.45), and Pakistan (US$28.11), data from Wood Mackenzie showed.
“The CCTS regulations have yet to clarify if offset-generated CCCs can be used for compliance. This decision will be crucial in determining the trajectory of offset prices in India,” said Shashank Atreya, senior research analyst, carbon markets at Wood Mackenzie.
The approved methodologies span sectors including energy, industry, waste management, forestry, and agriculture. Wood Mackenzie said this comprehensive coverage could result in a more diverse offset portfolio and influence project development trends.
“By providing a structured process to seek quality accreditation from the regulator, we are likely to see an increased domestic and foreign investment in Indian carbon reduction projects,” Atreya said.
According to Wood Mackenzie, the introduction of a formal framework for voluntary carbon markets is likely to build trust and attract wider participation, influencing both credit quality and pricing.
