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India’s new carbon market methodologies define offset landscape
30/4/2025
News
India’s recent approval of eight methodologies for its domestic voluntary carbon market is set to revitalise the national carbon offset landscape, according to a new report. Meanwhile, the UK government has begun a consultation on its guidelines for how businesses can utilise carbon credits to deliver climate strategies.
India’s Carbon Credit Trading Scheme (CCTS) introduces a framework that could significantly impact carbon credit prices, quality and trading patterns in the country, according to a new report from Wood Mackenzie.
‘India’s new methodologies could potentially boost the quality and credibility of its carbon offsets. This move may lead to an upward pressure on prices, narrowing the gap with neighbouring countries,’ comments Fernanda Abarzúa, Senior Research Analyst, Wood Mackenzie.
The report highlights that India plays a significant role in the global voluntary carbon market, with more than 5,000 projects registered across four major registries: the Clean Development Mechanism, the Verified Carbon Standard, the Gold Standard Registry and the Universal Carbon Registry.
In 1Q2024, India’s average carbon credit price of $2.35/t of CO2 was significantly lower than its South Asian counterparts: Sri Lanka ($3.77), Bangladesh ($4.45) and Pakistan ($28.11).
The CCTS allows for international trading of Carbon Credit Certificates (CCCs) under Article 6.2 of the Paris Agreement. This provision could increase India’s role in the global carbon market, the report notes. India has also opened credit generation opportunities in non-obligated sectors, facilitating mitigation from sectors not covered under the compliance regime.
Shashank Atreya, Senior Research Analyst, Wood Mackenzie, notes: ‘By providing a structured process to seek quality accreditation from the regulator, we are likely to see an increased domestic and foreign investment in Indian carbon reduction projects. The CCTS regulations have yet to clarify if offset-generated CCCs can be used for compliance. This decision will be crucial in determining the trajectory of offset prices in India.’
The new methodologies cover key sectors including energy, industry, waste management, forestry and agriculture. This comprehensive approach could lead to a more diverse offset portfolio, potentially influencing project development trends in the country, according to the report.
The analysis suggests that the decision to formalise these methodologies will build trust in Indian offsets.
UK backs businesses to trade carbon credits and unlock finance
In other news, the UK government has launched plans to strengthen voluntary carbon and nature markets, after widespread calls from businesses and organisations asking for greater clarity.
According to the government, these markets are not currently realising their full potential, with a lack of clarity among businesses and organisations on how they can be used, and some poor practice impacting their effectiveness in delivering meaningful climate action and economic growth.
The government says it plans to establish a global framework to build trust and confidence in carbon and nature credit trading, with a set of principles to guide and support businesses on how to use carbon credits that provide environmental benefits. This will include making clear what a good credit is, ensuring they are delivering environmental benefits and encouraging businesses to fully disclose what they are being used for in annual sustainability reporting.
These markets are estimated to be worth up to $250bn by 2050 for carbon markets, and $69bn for nature markets, under the right conditions. The consultation closes on 10 July 2025, and seeks responses from industry organisations and the public.
