As India advances its carbon market framework to support its climate commitments and 2070 net-zero goal, questions remain about policy design, financing mechanisms and the role of carbon credits in driving both environmental and developmental outcomes. In an interview with TGC, Narendra Prajapati, CEO of MicroEnergy Credits (MEC), a global social enterprise working at the intersection of climate finance and financial inclusion, discusses the opportunities and challenges facing India’s emerging carbon market.
Q. Given that India is still developing its carbon market architecture, what are the most significant policy gaps that could influence its long-term effectiveness?
A. India has made significant progress in building a domestic carbon market, but several policy gaps remain. Greater clarity is needed on how India’s compliance market will interact with international mechanisms such as Article 6, as well as global frameworks like the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the EU’s Carbon Border Adjustment Mechanism (CBAM). Stronger demand-side signals are also required to support market growth. While industrial mitigation is receiving attention, householdlevel interventions such as clean cooking remain under-represented. Greater transparency around India’s Nationally Determined Contributions (NDCs) and a clearer role for carbon markets in addressing energy security and energy poverty are also essential.
Q. If India is to meet its 2070 net-zero target, how critical will carbon markets be relative to direct policy interventions and industrial decarbonisation?
A. Achieving net-zero will require decarbonising power, electrifying industries and transport, expanding green hydrogen and improving energy efficiency. Strong policy support remains indispensable. Carbon markets are not a substitute for policy measures but a complementary tool that can mobilise climate finance, incentivise emissions reductions and accelerate mitigation.
Q. Do you see carbon credits in India primarily as a climate tool or a development tool, or can they realistically deliver both at scale?
A. Carbon credits can serve both climate and development goals. In India, climate priorities are closely linked to development needs. Initiatives such as clean cooking, distributed renewable energy and waste management reduce emissions while improving health, livelihoods and energy access. Projects that place communities at the centre tend to generate stronger and more sustainable outcomes.
Q. There is often skepticism about whether carbon finance truly reaches communities. How do you ensure benefits are not diluted across intermediaries?
A. The skepticism is understandable and stems from the gap between market activity and community-level benefits. MEC addresses this by working through trusted microfinance institutions and integrating carbon finance into existing financing channels. This reduces costs for households and improves access to clean energy. Robust digital measurement, reporting and verification (dMRV) systems help ensure benefits reach intended users.
Q. What makes India uniquely challenging or promising compared to markets in Africa or Southeast Asia?
A. India offers unmatched scale, strong institutions and growing policy momentum. Its carbon market opportunities span industrial decarbonisation, clean energy and communitybased interventions. However, uncertainties around authorisation, credit ownership, Article 6 transfers and regulatory complexity create challenges.
