India Advances Carbon Offset Plan With New Market Mechanism And Approved Methodologies

India is making significant progress in its efforts to reduce carbon emissions by implementing a structured carbon offset plan. The government has already taken important steps to establish the Indian Carbon Market (ICM) with the introduction of the Carbon Credit Trading Scheme in June 2023. This framework aims to support the country’s commitment to reducing emission intensity. To strengthen the system further, the government introduced an amendment in December 2023, adding an Offset Mechanism that allows non-obligated entities to participate in voluntary climate mitigation projects.

Taking this initiative forward, the government has now approved a Detailed Procedure for the Offset Mechanism, along with eight different methodologies under this framework. This marks a crucial milestone in making the Offset Mechanism fully operational under the ICM. The primary objective of this mechanism is to encourage voluntary participation by businesses, industries, and organizations in projects that help reduce, remove, or avoid greenhouse gas emissions. Entities that successfully implement such projects will be able to receive carbon credits for verified emission reductions.

This mechanism is designed to include sectors not covered under the compliance mechanism, thus expanding the scope of climate change mitigation efforts. The eight approved methodologies cover renewable energy projects, including hydropower and pumped storage, green hydrogen production, industrial energy efficiency improvements, landfill methane recovery, and mangrove afforestation and reforestation. These methodologies will facilitate the generation of voluntary carbon credits and provide incentives for organizations to adopt sustainable practices. This structured approach is expected to play a key role in India’s transition toward a low-carbon economy.