Carbon Credits in India: How Businesses Can Earn and Trade Under the New Carbon Market
India's Carbon Market Journey
India has committed to achieving net zero emissions by 2070 and reducing the emissions intensity of its GDP by 45% by 2030. To drive this, the Government notified the Carbon Credit Trading Scheme (CCTS) in June 2023 under the Energy Conservation (Amendment) Act, 2022 — establishing a regulated domestic carbon market managed by the Bureau of Energy Efficiency (BEE).
What is a Carbon Credit?
A carbon credit is a tradeable certificate representing the right to emit one tonne of CO₂ equivalent (tCO₂e). Entities that reduce emissions below their prescribed target earn credits that can be sold to entities that exceed their targets — creating a market incentive for emission reductions at the lowest cost.
India's Two Carbon Market Tracks
Compliance Market (CCTS)
Mandatory for obligated entities specified by the government — large industrial facilities in sectors like cement, steel, aluminium, textile, pulp and paper, chemicals, and petroleum refining. These entities are assigned annual emission intensity targets. Over-performers earn credits; under-performers must buy them.
Voluntary Offset Mechanism
Non-obligated entities — including MSMEs, renewable energy producers, and green building operators — can voluntarily generate and sell Carbon Credit Certificates (CCCs) to domestic and international buyers through a regulated registry.
Existing Carbon-Linked Schemes
PAT Scheme (Perform, Achieve and Trade)
Operated by BEE since 2012, the PAT scheme covers approximately 25 energy-intensive sectors. Participants who exceed their Specific Energy Consumption (SEC) targets earn Energy Saving Certificates (ESCerts). Under the CCTS, ESCerts will transition to Carbon Credit Certificates.
Renewable Energy Certificates (RECs)
One REC = 1 MWh of renewable energy generated. RECs are traded on the Indian Energy Exchange (IEX) and used by obligated entities to meet Renewable Purchase Obligations (RPOs).
Eligible Project Types for Carbon Credits
- Solar power (rooftop and ground-mounted)
- Wind energy
- Biomass and biogas projects
- Energy efficiency in buildings and industry
- Afforestation and reforestation
- Waste-to-energy and methane capture
- Green hydrogen production
- Sustainable agriculture practices
How to Earn Carbon Credits Under CCTS
- Register the project with the National Designated Authority (BEE under Ministry of Power)
- Follow approved methodologies for calculating baseline emissions and reductions
- Undergo third-party verification by an accredited Verification, Validation and Certification (VVB) body
- Submit project documentation and monitoring reports
- Receive Carbon Credit Certificates upon verified emission reductions
International Carbon Standards for Indian Projects
- Verra VCS (Verified Carbon Standard): World's most widely used voluntary carbon market standard
- Gold Standard: Premium voluntary standard developed by WWF
- CDM / Article 6.4: UN FCCC mechanism for projects in developing countries
Credits under these standards can be sold to international buyers seeking to offset Scope 3 emissions or support sustainability-linked financing.
Indicative Carbon Credit Prices (2024-25)
- ESCerts (PAT compliance): ₹750 – ₹1,500 per ESCert
- RECs: ₹1,000 – ₹2,500 per REC (solar)
- International voluntary credits from Indian projects: USD 3 – USD 15+ per tCO₂e depending on project type and co-benefits
What Businesses Should Do Now
- Measure your baseline: Conduct a GHG inventory (Scope 1, 2, and 3)
- Identify emission reduction opportunities: energy efficiency, renewable sourcing, process changes
- Evaluate carbon credit eligibility for existing or planned projects
- Engage a carbon consultant for project registration and verification
- Plan for CCTS compliance if you operate in a covered industrial sector
Conclusion
India's carbon market is nascent but growing rapidly. Businesses that move early — measuring emissions, registering projects, and engaging with the market — will be better positioned to reduce compliance costs, attract green financing, and contribute to India's net-zero goals. Statura's ESG and carbon advisory team helps businesses navigate the full lifecycle from GHG measurement to credit issuance and trading.