Ministry of Power introduces detailed offset mechanism within the Carbon Credit Trading Scheme

Introduction

The Indian government established a detailed Offset Mechanism through its Carbon Credit Trading Scheme (CCTS) in 2023 under the amended Energy Conservation Act, 2001 which introduced the Offset Mechanism. Through the Bureau of Energy Efficiency (BEE) management this mechanism enables businesses and NGOs and other non-obligated entities to register emission reduction projects for Carbon Credit Certificates (CCCs). The scheme functions to attract both private and public investments for low-carbon technologies while supporting India’s NDCs and SDGs.

Key Components of the Offset Mechanism

Registration and Issuance Process
Non-obligated entities need to register through the Indian Carbon Market (ICM) portal by providing organizational details and paying fees to receive their unique account ID.
The Project Design Document (PDD) demands complete information about project objectives and technological details together with boundary definitions and baseline scenarios and monitoring procedures. The draft PDD receives 30 days of public stakeholder feedback before the review process.
The Indian Carbon Market uses Accredited Carbon Verification Agencies (ACVAs) to perform third-party validation which confirms projects meet additionality standards (emission reductions above normal business operations). The Technical Committee evaluates approved projects before issuing “Offset Project” registration.
All projects need to execute monitoring plans that have been registered beforehand. Independent Accredited Carbon Verification Agencies conduct periodic checks of reported GHG reductions while performing mandatory site inspections for projects exceeding 100,000 tCO₂e yearly.
The National Steering Committee (NSC-ICM) sends verified projects to BEE for issuance of CCCs. The entity must pay ₹5 for each CCC which results in credit deposits being made to their ICM registry account.

Project Eligibility and Standards

Each project must follow the core principles which include transparency alongside consistency as well as conservativeness through avoiding overestimation and completion that covers all emission sources alongside alignment with SDGs.
The projects need to meet national laws through regulatory surplus which represents actions that surpass legal requirements. Retroactive projects which began their operations before January 1, 2025 are excluded from the requirements.
The regulation includes ten specific sectors for coverage which include energy alongside industry and forestry and carbon capture through CCUS. The projects need to prevent duplicate counting while maintaining no major environmental damage to the environment.

Methodology Development and Adoption

The development of new methodologies occurs through two approaches: stakeholder-driven proposals from the bottom-up and BEE-led initiatives from the top-down. The implementation of existing methods under global standards (CDM and Paris Agreement Article 6.4) can be accelerated through minor adjustments.
Real and measurable and additional emission reductions must be present in all methodologies. The baseline scenarios need to stay beneath regular business operations while accounting for restricted market demand such as providing energy services to underserved populations.
The naming convention for these methodologies follows “BM [Sector Code] [Serial Number]” format with BM EN01.001 serving as an example for the initial energy-sector methodology.

Integration with Sustainable Development Goals (SDGs)

Environmental and Social Safeguards: Projects must assess risks across 11 elements (e.g., climate impact, gender equality, land use) using the A6.4 SD Tool. Mitigation plans are required for high-risk areas.
SDG Quantification: Aligns with India’s National Indicator Framework (NIF), linking projects to specific SDG targets. For example:
Renewable energy projects contribute to SDG 7 (Affordable and Clean Energy) by tracking households electrified via clean sources.
Afforestation projects support SDG 15 (Life on Land) through increased carbon stock in forests.

Conclusion

Through its Offset Mechanism India provides a clear and accountable system to verify both actual carbon reduction achievements and progress in sustainable development goals. Its strengths include:
Projects required to follow SDG protocols achieve both climate and sustainable development goals because they perform additional benefits that include poverty reduction and gender equality improvement.
Methodological Flexibility: Balancing innovation (new methodologies) with global best practices (adoption of CDM/Article 6.4 standards).
The market achieves credibility through independent verification processes and public involvement and multiple review stages including the Technical Committee and National Steering Committee-Independent Certification Mechanism.
The mechanism has potential to serve as an example for developing countries aiming at uniting climate policies with economic development via improved sector methodology creation and SDG tracking systems. The structure is expected to become essential for both zero-carbon target attainment and the development of a comprehensive carbon market in India by 2030.
 
https://beeindia.gov.in/sites/default/files/Detailed%20Procedure%20for%20Offset%20Mechanism_CCTS.pdf