In June 2023, the Indian government launched the Indian Carbon Market (ICM) framework to facilitate the trading of carbon credits and reduce greenhouse gas emissions. The framework, known as the Carbon Credit Trading Scheme (CCTS), was officially notified in June 2023 and amended in December 2023. The scheme aims to enable the registration of projects that reduce, remove, or avoid greenhouse gas emissions.
The Bureau of Energy Efficiency has approved a list of 10 sectors for the Offset Mechanism under the CCTS, with six sectors belonging to Phase 1. The Bureau has developed 12 methodologies for these sectors, which were published on January 23, 2025, and comments are being sought by January 30. The offset mechanism is a project-based system designed for non-obligated entities to register projects that reduce, remove, or avoid greenhouse gas emissions.
Non-obligated entities can earn Carbon Credit Certificates (CCCs) based on their performance against a baseline. The methodology approval process involves a project cycle, which includes baseline and monitoring components. The latest document lists 12 methodologies, which cover sectors such as energy production, industrial efficiency, waste management, and transportation. These methodologies have been adapted from the existing UNFCCC Clean Development Mechanism (CDM) methodologies.
The energy sector accounts for 83% of the total projects under the CDM and Voluntary Carbon Market in India, while industrial projects make up around 7%. The four remaining sectors, construction, fugitive emissions, solvent use, and CCUS, are scheduled for Phase 2, with methodologies yet to be detailed. The implementation of these methodologies is expected to incentivize action in these sectors, enabling India to achieve its Nationally Determined Contributions (NDCs) and reduce greenhouse gas emissions.