India needs to build a credible carbon market, minus an offset mechanism

Not including all hard-to-abate sectors in carbon emission intensity targets will reduce market size and impact liquidity. Offset mechanism isn't a solution

The Carbon Credit Trading Scheme (CCTS) was notified by the Government of India in June 2023, and several steps have since been taken to operationalise it. Trading is expected to begin in 2026, with market stabilisation expected by 2027.

 

This article analyses the government’s approach to developing a carbon market and highlights key challenges in making it a successful initiative. Admittedly, this is a complex and evolving subject, and several additional issues will need to be addressed going forward.

 

Let’s begin with the basics. A genuine and fairly estimated demand is essential for the development of a market for any