India to launch its own carbon market by 2026

India is set to establish its own carbon market by mid-2026, a move expected to help industries transition towards cleaner energy and align with global emission standards. Power Minister Manohar Lal confirmed the timeline, emphasising that the initiative will introduce a structured system for buying and selling carbon credits.

A forest worker plants a sapling on a hillside in India, with New Delhi in the background. AI generated picture. 

‘Very soon we are going to launch an independent carbon market of our country…Likely by mid of 2026’, said the minister. ‘Under this programme, one who uses fossil fuel or emits carbon would have to buy carbon credits, and those who would use power from non-fossil sources would have carbon credits which they can sell in the market.’

The introduction of a national carbon trading system comes at a crucial time for Indian exporters, particularly those in high-emission sectors like steel and cement. With the European Union’s Carbon Border Adjustment Mechanism (CBAM) imposing levies on carbon-intensive imports, businesses must comply with international carbon regulations to remain competitive.

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‘Compliance with international carbon regulations is essential for businesses, especially those exporting to markets with stringent environmental policies’, the minister noted. By enabling industries to offset their emissions through carbon credit trading, the new market will encourage the adoption of cleaner technologies and provide a pathway to meeting global environmental standards.

The foundation for this initiative was laid in 2022 with the passage of the Energy Conservation (Amendment) Bill, which established the legislative groundwork for carbon trading. Once operational, the market will create financial incentives for businesses to lower their emissions, allowing them to trade credits based on their carbon output.

Stakeholders from various industries have been anticipating this development, seeing it as a strategic step toward a low-carbon economy. By promoting cleaner industrial practices and providing companies with market-based mechanisms to reduce emissions, India aims to strengthen its position in global trade while advancing its sustainability goals.

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