In short
A carbon credit represents one tonne of CO2-equivalent reduced or removed. In India, carbon credit certificates come from the compliance market and a voluntary offset mechanism, separate from green credits. How each works.
A carbon credit represents one tonne of carbon dioxide equivalent (tCO2e) reduced, avoided or removed. In India, carbon credits now come from a regulated national market — the Carbon Credit Trading Scheme (CCTS) — alongside a separate Green Credit Programme and the international voluntary markets. They are often confused. This guide sets them side by side.
The Indian carbon market: two mechanisms
The compliance mechanism
Plants in seven energy-intensive sectors — aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals and textiles — have legally binding greenhouse gas emission intensity targets, with FY 2025-26 and FY 2026-27 as the first compliance years.1
- A plant whose intensity is below its target is issued certificates for the difference.
- A plant above its target must surrender certificates for the shortfall; a plant that does not surrender enough faces environmental compensation of twice the average certificate price.2
- Certificates are traded on the power exchanges, under the Central Electricity Regulatory Commission.2
The offset mechanism
Entities that are not obligated can register eligible projects that reduce, remove or avoid emissions and be issued carbon credit certificates for them.2 Under the scheme's rules, offsets cannot be used by obligated plants to meet their targets.2 We explain the project cycle in How to earn and sell carbon credits in India; targets, the compliance cycle and shortfalls are covered in India's Carbon Credit Trading Scheme.
Green credits: not the same thing
The Green Credit Programme, under the Green Credit Rules, 2023 made under the Environment (Protection) Act, 1986, rewards voluntary environmental actions such as tree plantation, water management, sustainable agriculture and waste management.3 It is administered by the Indian Council of Forestry Research and Education and is independent of the CCTS; the same activity may earn both.3
| Carbon credit certificates (CCTS) | Green credits | |
|---|---|---|
| Law | Energy Conservation Act, 2001 | Environment (Protection) Act, 1986 |
| Unit | One tonne of CO2e | Per activity, under its methodology |
| Who | Obligated plants (compliance); others through offsets | Individuals, companies and others undertaking eligible activities |
| Administrator | Bureau of Energy Efficiency | Indian Council of Forestry Research and Education |
International voluntary credits
Indian projects have long sold credits on international voluntary registries. Secondary guidance on the offset mechanism states that a project cannot be registered with another carbon market at the same time.5
Carbon credits and the BRSR
Since FY 2024-25, the BRSR asks — as a voluntary leadership indicator — for green credits generated or procured by the company and its top ten value-chain partners.4 Your reported Scope 1 and Scope 2 emissions remain your actual emissions; credits bought are reported separately, not subtracted from them.
Frequently asked questions
What is one carbon credit worth in India?
Certificate prices are set by trading on the power exchanges. Check the exchanges for current prices.
Can any company buy carbon credits in India?
Obligated plants buy certificates to cover shortfalls. Rules on who else may participate in trading are set by the regulator; check the latest rules with the Bureau of Energy Efficiency and the exchanges.
Is a green credit a carbon credit?
No. Green credits are a separate programme with their own rules and administrator.
How ESGTrack helps
ESGTrack calculates emissions from approved activity data with recognised factors, and its compliance module tracks each obligated plant's target, achieved intensity, certificate position and exposure to compensation. See compliance programmes, the free emissions calculator, or book a demo.
References
- Compliance obligations under India's Carbon Credit Trading Scheme enter into force for seven sectors — International Carbon Action Partnership. 30 March 2026
- Indian Carbon Credit Trading Scheme (ETS detailed information) — International Carbon Action Partnership. 2026
- Green Credit Rules: the new gold rush? — Alaya Legal (Mondaq). 3 June 2024
- Measures to facilitate ease of doing business with respect to framework for assurance or assessment, ESG disclosures for value chain, and introduction of voluntary disclosure on green credits — Securities and Exchange Board of India (circular). 28 March 2025
- How to earn carbon credits in India — Carbon Market Network. 2026
Next review due 6 May 2027. Regulations change: check the primary sources above before relying on a date or threshold.