Breathing Room

India's Carbon Credit Trading Scheme could be a game changer and a crucial step towards meeting its climate targets

- S DINAKAR

Late last month, on one of those increasingly rare days in New Delhi with clear skies and fresh air, Saurabh Diddi, director of the Bureau of Energy Efficiency (BEE), launched Prakriti 2025. India's first state-sponsored international carbon markets event served as a platform to showcase the country's progress in launching a Carbon Credit Trading Scheme (CCTS).

The seeds for India's carbon market were sown over four years ago during the Covid-19 pandemic. They germinated in 2022 and have since sprouted green shoots. The CCTS will start in phases between September this year and October 2026. It comprises a compliance regime and a voluntary carbon credit offsets market.

Some call it a slow start, but India's CCTS is a more complex structure, perhaps aligned with the country's developmental stage, compared to independently verified emissions performance. Right now, they are using the best data available, and there are inevitably some political delays. But I think it is impressive that India stuck with it.

Regardless of how one defines the CCTS and its objectives, the programme's eventual goal, like any public policy initiative, is citizen welfare—to ensure more days of clear skies and improve India's image from being home to some of the world's most polluted areas.

A more immediate, tangible objective is to secure necessary climate finance—with the projected annual funding need exceeding $170 billion—to drive the local climate economy and secure Indian developers a share of the $1.5 trillion global carbon credit market.

The need for CCTS intensified after developed nations agreed to fund only a fraction of the $1.3 trillion that developing nations demanded at COP29 in Baku, leaving India and others to cover much of the cost for climate damage caused by the US, UK, and Europe.