WHEEL OF TIME: Maruti Suzuki Toyotsu India’s vehicle scrapping and recycling facility at Noida in Uttar Pradesh
| Photo Credit:
KAMAL NARANG
Scrapping a vehicle that has reached its end of life — as opposed to keeping the rickety vehicle running by changing aggregates — is a climate-friendly move. A study by IIT-Bombay shows that for every tonne of mixed materials recovered from a vehicle and reprocessed (replacing virgin materials like metal, glass and plastic), about 0.6 tonnes of carbon dioxide emissions can be avoided. For instance, recovering steel from a vehicle — remember, 60 per cent of a vehicle’s weight is steel — can avert the emission of the 2 tonnes of carbon dioxide that accompanies the manufacture of virgin steel.
India has an end-of-life vehicle (ELV) scrapping policy, a key component of which is the ‘certificate of deposit’ (CD), a government coupon that makes the holder eligible for discounts on road tax (typically 10 per cent of vehicle value) and registration charges when buying a new vehicle. The discount on road tax varies by State. The CDs can be traded in the market.
Despite the policy, the uptake of formal vehicle scrapping has been disappointingly low. The government estimated there were one crore ELVs in 2022 and projected 2.5 crore by 2025. However, fewer than 2,00,000 vehicles have been scrapped under the policy, representing less than 1 per cent of the total. A major reason for the low adoption is the disparity in infrastructure and profitability.
While there are nearly 140 licensed registered vehicle scrapping facilities (RVSFs) in India, with about 78 concentrated in the National Capital Region (where compulsory scrapping is enforced by the National Green Tribunal), formal RVSFs require substantial investment (₹10-20 lakh per facility, totalling around ₹2,000 crore across the sector) to meet de-pollution and environmental standards. In contrast, the informal sector, which often disregards environmental protocols (for example, spilling oil, releasing AC gases), enjoys higher profitability by reselling parts.
Now, Meta Materials Circular Market (MMCM), a joint venture of NCDEX e-Markets Ltd and the MTC group, is trying to put carbon credits in the pockets of those who scrap their vehicles.
The company helps vehicle recyclers, providing the know-how and tools to generate carbon credits, for a revenue share.
“Climate finance is the solution,” says Yashodhan Ramteke, Head–Carbon Unit, MMCM. In an interaction with businessline, Ramteke said that MMCM has partnered with Seracarbon, a US-based standard, in preference to others such as Gold Standard or Vera, because of its advanced registry support for digital measurement, reporting, and verification (DMRV) processes.
DMRV enables complete traceability of every piece of material and every credit generated, ensuring transparency and eliminating double counting. MMCM estimates that carbon credits from scrapped vehicles could fetch $20-25 a tonne in the global voluntary market.
The main buyers of these credits would be auto OEMs — after all, these credits originate from their own value chain, offering a more relevant offset compared with generic credits, such as those accruing from distributing eco-friendly cookstoves.
Carbon marketplace
MMCM is working with Niti Aayog, the Indian government’s think-tank, to introduce ELV credits into the evolving Indian Carbon Market (ICM), which is expected to be operational next year. MMCM’s methodology has already been submitted for inclusion in the offset (voluntary) segment of ICM, Ramteke said. He expects that credits from the Indian offset market would be allowed to be traded in the global obligated markets, to help India meet its commitments.
Furthermore, MMCM is strategically aiming to place its methodology under Article 6.2 of the Paris Agreement. The article governs the global compliance markets. India is on the verge of signing a joint credit mechanism (JCM) with Japan. This is particularly relevant given that 70 per cent of Indian cars have Japanese links. Credits traded under such an agreement could fetch a higher price — perhaps $25-30 a tonne.
Ramteke expects the first trade of these unique carbon credits within the next eight months. “No other country has yet developed a climate financing mechanism for ELV scrapping,” he notes.
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Published on August 18, 2025
