India now has two carbon credit systems running at once, and they are not interchangeable. Confusing them is the most common error in Indian corporate climate communication.
The compliance market
The Carbon Credit Trading Scheme, administered by the Bureau of Energy Efficiency, covers roughly 490 obligated entities across energy-intensive sectors including aluminium, cement, iron and steel, fertiliser, pulp and paper, petrochemicals, refining, chlor-alkali and textiles.
Entities receive an emission intensity target, measured per unit of product rather than as an absolute cap. Beat it and you earn certificates you can sell. Miss it and you must buy certificates or pay a penalty.
Participation is not optional. Crossing the energy consumption threshold in a notified sector makes a facility obligated automatically.
The voluntary market
Anyone can buy voluntary credits from project developers: renewable energy, forestry, cookstoves, methane capture. No regulator requires it, and prices are set by what buyers will pay for the claim.
Quality varies enormously, and the central question for any voluntary credit is additionality. Would the emission reduction have happened anyway? A credit from a solar farm built because it was commercially attractive represents no additional reduction, whatever the certificate says.
Where companies get it wrong
Three errors recur.
- Treating voluntary credits as compliance. They do not discharge an obligation under the compliance scheme.
- Netting credits against reported emissions. Greenhouse gas accounting requires gross emissions to be reported. Offsets are disclosed separately, not subtracted.
- Claiming carbon neutrality on purchased offsets. Under the consumer protection guidelines on greenwashing, a carbon-neutral claim needs substantiation that survives publication.
The green credit that is neither
Green credits under the tree plantation programme are a third and separate instrument. They are awarded per surviving tree after five years and 40 per cent canopy cover, and they are non-transferable except between a holding company and its subsidiaries. There is no market. They are not carbon credits and cannot be used as such.
