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The India Carbon Credit Market experiences surging demand due to stringent government regulations under the Carbon Credit Trading Scheme (CCTS), which mandates emission intensity targets for sectors like cement, steel, and petrochemicals, covering 16% of national emissions. The compliance segment dominates with 90.2% market share, compelling industries to purchase credits for non-compliance, while the power sector accounts for 29.8% of demand amid energy transition mandates.

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Corporate initiatives amplify this growth, as Adani Group's Ambuja Cements secures Indo-Swedish grants for carbon capture utilization, and AGEL's renewable projects curb 21 million tonnes of CO2 annually. The voluntary offset mechanism enables non-obligated entities to trade credits, supported by the Green Credit Programme incentivizing sustainability actions across sectors.

Key Market Trends & Insights:

Regulatory Framework Expansion

India's Carbon Credit Trading Scheme establishes a compliance market with intensity-based targets for nine energy-intensive sectors like cement, steel, and textiles. The Bureau of Energy Efficiency enforces regulations where entities exceeding targets surrender credits, while outperformers earn tradable certificates. This structured oversight by the National Steering Committee provides businesses clear decarbonization pathways.

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Corporate Net-Zero Pledges

Major firms including Tata Steel, Reliance Industries, Mahindra, Infosys, and NTPC commit to Net Zero, integrating carbon pricing into strategies. They conduct emissions inventories and invest in abatement technologies ahead of compliance. Eight voluntary crediting methods approved by the Ministry of Power, such as green hydrogen and renewables, enable diverse offset options.

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Nature-Based Solutions Growth

Voluntary markets expand via projects like mangrove afforestation and ecosystem restoration under Verra and Gold Standard. The Green Credit Programme incentivizes tree planting on degraded lands, issuing digital credits for maintenance. These initiatives deliver co-benefits like biodiversity and attract buyers seeking verifiable environmental impact.

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Community-Driven Initiatives

The National Dairy Development Board partners with EKI Energy Services to pay Rajasthan and Assam dairy farmers carbon credits for manure biogas plants. Over 1,000 farmers across seven states gain revenue from waste-to-fuel systems. This model scales carbon finance to smallholders in agriculture through aggregated structures.

Sectoral Compliance Transition

Energy-intensive industries shift from Perform, Achieve and Trade to Carbon Credit Trading Scheme using 2023-2024 baselines. Verified GHG reports by accredited agencies ensure adherence within four months post-compliance year. This covers aluminum, petrochemicals, and fertilizers, fostering investment in low-carbon technologies.?

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