India approves offset mechanism for carbon market

India has approved the Detailed Procedure for the Offset Mechanism and eight methodologies under the Indian Carbon Market (ICM). This enables voluntary participation in carbon trading and supports projects that reduce or remove greenhouse gas emissions.

The government had notified The Carbon Credit Trading Scheme, 2023, in June last year, establishing the National Steering Committee for Indian Carbon Market (NSCICM). An amendment in December 2023 introduced an Offset Mechanism, allowing non-obligated entities to participate in climate mitigation projects.

With these approvals, businesses and organizations outside the compliance mechanism can generate carbon credits from verified emission reductions. The eight approved methodologies under the Offset Mechanism include renewable energy (such as hydro and pumped storage), green hydrogen production, industrial energy efficiency, landfill methane recovery, and mangrove afforestation and reforestation. These methodologies provide a framework for developing voluntary climate projects and integrating them into India’s carbon market.