As India’s carbon market evolves, the need for robust digital infrastructure has become increasingly evident. A centralised carbon credit registry and electronic trading platform are now under development, aimed at ensuring transparency and streamlining the trading process.
August 21, 2025. By News Bureau
As the global shift toward net zero accelerates, carbon credits are emerging as a key mechanism for both environmental progress and economic opportunity. Designed to incentivise emissions reductions and enable cross-sectoral decarbonisation, carbon credits are now being integrated into the core climate strategies of many nations. India, one of the world’s fastest-growing major economies, has signaled a clear commitment to this transition. With a net-zero target set for 2070 and enhanced climate goals under its revised Nationally Determined Contributions (NDCs), the country is laying the groundwork for a more structured and proactive engagement with carbon markets.
India’s Position in the Carbon Credit Market
India’s revised NDCs call for a 45 percent reduction in emissions intensity by 2030 compared to 2005 levels, setting a clear path toward long-term climate targets. These commitments are supported by the launch of the Carbon Credit Trading Scheme (CCTS), which has formally established the Indian Carbon Market (ICM). Under this scheme, entities can generate credits by lowering their emissions beyond established baselines. These credits are then tradable, enabling companies to meet regulatory or voluntary targets through market-based mechanisms.
The CCTS builds on earlier initiatives such as the Perform, Achieve, and Trade (PAT) scheme and Renewable Energy Certificates (RECs), which focused on industrial energy efficiency and green energy production. Together, these frameworks reflect a more integrated and proactive approach to climate governance. India is also gaining global recognition as one of the few emerging economies actively developing a structured carbon credit system. By embedding carbon trading into national policy, the country is signaling its readiness to contribute meaningfully to global carbon pricing and offset mechanisms.
Digitalisation of the Carbon Credit Market
As India’s carbon market evolves, the need for robust digital infrastructure has become increasingly evident. A centralised carbon credit registry and electronic trading platform are now under development, aimed at ensuring transparency and streamlining the trading process. Herein, digital Monitoring, Reporting, and Verification (MRV) systems will form the backbone of this infrastructure. These tools enable real-time emissions tracking, automated compliance checks, and greater visibility into project-level performance.
By adopting digital MRV frameworks, India can reduce verification delays, limit discrepancies, and build credibility with international buyers. Meanwhile, digitalisation enhances market efficiency by mitigating issues such as double-counting and fraud. Over time, these systems will help establish India’s carbon market as not just functional but trustworthy and scalable. Moreover, the digitisation of energy data within these systems positions energy as a new form of currency in the carbon economy. High-quality energy data, derived from real-time monitoring and analytics, serves as a critical asset, enabling faster scaling of sustainable practices and providing actionable insights to drive global decarbonisation efforts.
Growing Demand for Carbon Credits in India
India’s carbon credit demand is being driven by a combination of regulatory mandates and voluntary climate commitments. Heavy industries, such as steel, cement, and power, are under increasing pressure to decarbonise. Carbon credits offer these sectors a pathway to manage compliance costs while transitioning toward cleaner operations. In parallel, companies are adopting Environmental, Social, and Governance (ESG) frameworks to align with investor expectations and global supply chain standards. Carbon credits are becoming a key component in meeting these voluntary targets.
International mechanisms like the European Union’s Carbon Border Adjustment Mechanism (CBAM) further amplify the demand. Indian exporters, particularly those dealing in carbon-intensive goods, are now looking to carbon credits to maintain market access and comply with emerging global norms. According to projections, India’s voluntary carbon credit market is expected to grow at a compound annual rate of 38.4 percent between 2025 and 2030, potentially crossing $1.1 billion by the end of the decade. The scale and urgency of this growth underscore the need for a well-regulated and transparent market ecosystem.
High-Impact Sectors and the Future of Carbon Credits
Renewable energy continues to dominate carbon credit generation, contributing over 75 percent of revenue share in 2024. Solar and wind projects lead the way, while technologies such as green hydrogen, offshore wind, and energy storage are emerging focus areas under the CCTS framework. The integration of energy as a high-quality data source within these projects enhances their efficiency and scalability, enabling smarter grid management and faster adoption of renewable technologies. Also, heavy industries, particularly steel and cement, are becoming key participants due to their emissions intensity. The steel sector alone accounts for approximately 12 percent of India’s CO₂ emissions. Participation in carbon markets allows these sectors to reduce emissions and monetise surplus reductions through credit trading.
Micro, small, and medium enterprises (MSMEs) also stand to benefit from targeted policy support. Incentives such as tax relief, subsidies, and access to green finance can accelerate the adoption of clean technologies and support participation in the carbon market. This creates space for decentralised innovation and a more inclusive market ecosystem.
Overcoming Structural Barriers in India’s Carbon Market
Despite progress, several challenges continue to limit the carbon market’s full potential. Verification and certification continue to present operational hurdles, especially for smaller projects operating in sectors such as agriculture, reforestation, and waste management. High audit costs and limited access to accredited verifiers make participation difficult.
Projections suggest that India may exceed emission reduction targets in the coming years, and the upcoming launch of a national carbon market by 2026 could mark a pivotal moment. With the right policy support, infrastructure, and stakeholder engagement, India is well-positioned to scale its carbon credit market and align with international standards.
Conclusion
The phrase ‘green is the new gold’ is not just metaphorical; it reflects a tangible economic and environmental shift. India is at a strategic point in its climate transition, and carbon credits are emerging as a core element in its pathway to low-carbon growth. By establishing a transparent, digital, and inclusive carbon market, the nation can not only meet its domestic climate targets but also become a credible supplier of high-quality credits to the global market. As energy becomes a currency through digitization, high-quality energy data will accelerate this transition, providing a robust foundation for scaling sustainable practices and paving the way for a low-carbon future. If these elements are aligned, India’s carbon credit market can deliver both environmental impact and economic value at scale.
– Sapna Nijhawan, Founder and CEO, Sustainiam
