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Central Government Approves Eight Methodologies Under Offset Mechanism to Boost Indian Carbon Market

The Indian government has approved detailed procedures for the offset mechanism, introducing eight distinct methodologies aimed at advancing the Indian Carbon Market.

Key Sectors Covered

The approved methodologies span across multiple sectors, including:

• Renewable energy (including hydropower and energy storage)
• Green hydrogen production
• Industrial energy efficiency
• Landfill methane recovery
• Mangrove afforestation

These methodologies are expected to support climate-friendly projects and facilitate the generation of voluntary carbon credits.

Background: The Carbon Credit Trading Scheme, 2023

The Government of India introduced the Carbon Credit Trading Scheme, 2023 in June 2023, establishing an institutional framework for the market. This included forming the National Steering Committee for the Indian Carbon Market (NSCICM).

A subsequent amendment enabled the offset mechanism, allowing non-obligated entities to voluntarily participate in carbon trading and contribute to climate action efforts.

Impact on India’s Carbon Market

The newly approved methodologies are expected to expand the scope of the Indian Carbon Market, attract private sector participation, and accelerate decarbonization initiatives across industries.