Climate Change

Due credit: The Indian voluntary carbon market is growing exponentially

India’s lucrative carbon market is worth over $1.2 billion. It will only grow as the crisis of climate change becomes more urgent and companies strive to attain net-zero emission goals

By Trishant Dev, Rohini Krishnamurthy
Published: Thursday 05 October 2023

Illustrations :  Ritika Bohra and Yogendra AnandOn August 4, India’s power minister Raj Kumar Singh announced at an event organised by his ministry that the country was open to the export of carbon credits, though he did qualify this by saying that trading would be done with countries that buy green hydrogen from India. The announcement came after months of toing and froing on the issue. It started in August last year, when during a debate in the Parliament on the Amendments to the Energy Conservation Act, which proposed the creation of a domestic carbon market, Singh said that India would not allow any export of carbon credits until the nation meets its climate goals. (Under the Paris Agreement of 2015, India has pledged to reduce the emissions intensity of its GDP by 45 per cent by 2030, from the 2005 level.) “These credits will have to be generated and bought by domestic industries,” Singh had said.

The minister’s comment did not go down well with the private players engaged in the carbon market. Within days, the share price of one of India’s top carbon credit developer and suppliers EKI Energy Services Ltd plunged. On August 18, 2022, Manish Dabkara, chairperson and managing director of EKI Energy, told Mongabay, a news portal, that Singh’s comment was not applicable to the voluntary carbon market.

The government’s position appeared to have changed to an extent by October that year, when Singh on the sidelines of the Fifth Assembly of the International Solar Alliance told the media that Indian carbon credits would be allowed to be sold in both domestic and overseas markets. “Those carbon credits that go to make up our own NDCs [nationally determined contributions under the Paris Agreement] we would want to keep for ourselves. But anything beyond that can be sold anywhere in the world,” he said. On June 28, 2023, the government issued a notification, detailing the framework of Indian carbon market under the Carbon Credit Trading Scheme, 2023, but does not include voluntary markets (see ‘Saving the carbon bubble’,).

  • India has 1,451 projects registered or under various stages of consideration at the world’s two leading carbon registries

  • Carbon credits issued to Indian entities are worth 11% of India’s annual greenhouse gas emissions in 2021

  • Indian entities have already earned about $652 million from carbon credits used to offset emissions

All set to grow

Carbon credit is already big buck business and India has a substantial share of the market for voluntary carbon credits. Investigation by Down To Earth and the Centre for Science and Environment (DTE-CSE) shows that till June 2023, the country had 860 registered and a total of 1,451 projects under various stages of consideration at the world’s two leading carbon crediting programmes, Verra and Gold Standard, which certify projects to receive credits. India is a big player even in terms of the volume of carbon credits. Verra and Gold Standard—Verra, set up by a group of environmental and business leaders, is headquartered in Washington, DC; Gold Standard was founded by a group of non-profits and is based in Geneva—control roughly 90 per cent of the independent (non-governmental) carbon credits issued across the world. Almost one-fifth—or 298 million—of these credits have been issued to Indian entities. Each carbon credit represents 1 tonne of carbon dioxide or the equivalent greenhouse gas (CO2e) avoided, reduced or removed (market terminology for sequestration). This would mean the carbon credits issued to Indian entities are worth almost 10 per cent of the country’s annual greenhouse gas emissions in 2020.

 This article was originally published as part of Down To Earth’s special issue dated 1-15 October, 2023. 
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Also read the report
Discredited: The Voluntary Carbon Market in India

Of this, some 163 million credits have been “retired” by May 2023. Meaning, the companies that had got the carbon credits issued have sold these to other companies and the buyers have claimed emission offsets against the credits. For once, India has beaten China, which has retired 100 million credits till May 2023. DTE-CSE investigation shows that these carbon credits sold by Indian entities have been bought by companies like Vitol Asia PTE Ltd, a Singapore-based business that trades in oil and gas among other commodities; Michelin Group, a French multinational tyre manufacturer; and Shell, a British multinational oil and gas company.

The market is opaque, to say the least. What is not at all clear is the price at which the carbon credits have been sold. The transactions are treated as “commercial” and hence confidential—convenient for a market which works purportedly for the planetary good.

According to Ecosystem Marketplace, a US-based research organisation, the total recorded transactions globally in 2021 were $1.98 billion (R16,342 crore), against which 493 million credits were either issued or retired. This would mean the average price of a carbon credit was $4 (R330) in 2021. In India, DTE-CSE investigation shows that the price would range from $2 to $10 (R165-R824) per credit that have been retired till now.

Assuming that the global average price is $4 per credit, India’s carbon market is valued at $1.2 billion (R9,894 crore)—or possibly more given the current market rates. If one assesses the value of India’s retired credits, the sellers must have realised as much as $652 million (R5,376 crore). So, India already has a lucrative market, which developers believe will only grow as the crisis of climate change becomes more urgent and companies strive to attain net-zero emission goals.

Credit cards

Carbon credits are issued for nine types of projects that either avoid greenhouse gas (GHG) emissions by allowing a switchover to clean sources or those that remove/sequester the already- emitted GHGs

Renewable Energy

Over 32% of all credits issued in the voluntary carbon market are for renewable energy. About 90 per cent of these credits are for grid-connected  electricity generation from renewable sources, with wind (49%), hydropower (33%), and centralised solar (15%) being most common


Projects include methane reduction activities from paddy fields, improved irrigation. Manure methane  management (78%) and rice emission reduction (17.5%)  projects make up for the majority of credits issued. US and China lead in terms of credit issuance under agriculture

Forestry and Land Use

Focus on ecosystem-based approaches to reduce emissions and/or increase removal of GHGs from land-use activities, such as  afforestation, improved forest management and wetland restoration. This category attracts the largest share of credits; most are in the US, Indonesia, Brazil and Peru

Household and Community

This category has drawn the third-largest share of issued credits.

Most of the credits are earned by clean cookstove   projects, and there are over 1,200 clean cookstove projects registered with major  programmes



About 1% of  all registered projects belong to transportation sector.

Most of the projects are focused on electric vehicles and charging, as well as energy efficiency  for public  transportation


Waste Management

Projects in this category mainly involve flaring or other use of landfill methane.

The US and China have two-thirds of the projects with issued credits


Industrial and Commercial

Mostly includes  coal-mine methane capture projects from the US, China and Germany.

Other projects include  waste heat recovery, industrial energy  efficiency and  electricity generation from natural gas


Chemical Processes

Most listed projects are those that recover and destroy ozone-depleting substances.

Over 90% of these projects originate from the US


Carbon Capture and Storage

Includes projects that capture and store carbon.

The number of projects in this category is currently low, but is expected to grow as there is a push for carbon capture technologies,  including direct air capture.

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