India could deploy its carbon market to attain climate leadership

By tackling legacy inefficiencies, investing in innovation and scaling homegrown services in clean energy and unexplored reserves, India is cutting emissions while unlocking economic value.

As CoP-30 in Belém, Brazil, this year nears, the urgency of climate action could not be starker. The Sixth Assessment Report (2023) of the Intergovernmental Panel on Climate Change reaffirmed what science has long warned: global warming is accelerating, and the 1.5° Celsius target is slipping away.

Against this backdrop, India’s climate actions resonate globally. CoP-30 will serve as a pivotal moment in international negotiations and a strategic opportunity for India to accelerate its ambitions through robust carbon markets, digital verification of offsets and the adoption of transformative clean technologies.

Carbon market evolution: India has long walked a fine line between its developmental priorities and climate responsibilities. Yet, recent years mark a clear pivot. Despite its lower historical emissions, India is one of the few major economies whose trajectory aligns with its fair share under the Paris Agreement. Its policies, according to Climate Action Tracker (2024), are among the most ambitious relative to its national capacity, especially its bold commitment of 500GW renewable capacity by 2030.

At the heart of this strategy is the creation of a national carbon market. The Carbon Credit Trading Scheme (CCTS), notified in June 2023, represents a major step. Unlike earlier initiatives like the Perform, Achieve and Trade scheme, the CCTS goes beyond power and heavy industry coverage to open carbon trading to multiple sectors of the economy. Supported by the Energy Conservation (Amendment) Act of 2022, India’s framework integrates voluntary and compliance markets under a unified architecture.

Experts estimate India’s carbon market could unlock a $200 billion opportunity by 2030. With sectors such as steel, cement, transport and agriculture in focus, industries could monetize efficiency gains by obtaining and trading emission credits. This not only incentivizes decarbonization, but also prepares Indian businesses for a carbon-constrained world, especially as mechanisms like the EU’s Carbon Border Adjustment Mechanism tighten global trade rules.

Digitally verified carbon offsets (DVCOs): The credibility of carbon markets hinges on a single word: integrity. Traditional monitoring and verification systems are paper-heavy, delayed and vulnerable to errors and cannot meet the demand for scale and trust. DVCOs are fast emerging as the answer.

Leveraging blockchain, satellite imagery, machine learning and remote sensing, DVCOs validate emission reductions in near real-time. They slash costs, cut delays and enhance transparency, making carbon credits both trustworthy and tradable.

The World Bank has highlighted that digital measurement, reporting and verification can reduce time and costs dramatically, accelerating the issuance of credible credits.

India is already showing leadership here. Indian platforms are pioneering real-time digital certification of emission reductions, ensuring offsets meet the stringent integrity standards of the Paris pact’s Article 6. These innovations show how India could not only decarbonize its domestic economy, but also export trusted, high-quality offsets.

Align domestic and global carbon governance: The path to CoP-30 will be defined by the operationalization of Article 6, particularly points 6.2 and 6.4, which establish frameworks for international carbon trading and the sustainable development mechanism. With the registry and tracking system for carbon transactions finalized at CoP-29 in Baku, Azerbaijan, the stage is now set for market-ready international cooperation.

For India, aligning its domestic carbon market with Article 6 could be transformative. Internationally transferred mitigation outcomes (ITMOs) could channel global climate finance into Indian projects, whether in renewable energy, biodiversity or rural climate schemes. This would not only fund India’s low-carbon transition, but also empower communities on the ground.

India can also use CoP-30 to champion climate finance reform. While developed nations pledged $100 billion annually by 2020, delivery fell short. By 2035, developing economies will need at least $1.3 trillion annually to meet their goals. India, with its G-20 presidency legacy, is well-placed to push for fairer climate finance mechanisms.

A blueprint for leadership: As we look ahead to CoP-30, India stands at a rare confluence of ambition, capability and necessity. By strengthening its domestic carbon market, embracing DVCOs and aligning with Article 6’s architecture, India can shape a climate strategy that is credible, equitable and globally influential. Transparent, tech-enabled and citizen-centric carbon markets can turn emission reduction into a scalable, financeable and high-integrity effort.

The stakes go beyond just compliance. This is about providing trusted climate services. The question is no longer whether India will act, but how boldly it will lead.

The authors are, respectively, national spokesperson, BJP, and executive director, energy and climate practice at Grant Thornton Bharat.