Carbon offsets are a mechanism used to mitigate the greenhouse gas emissions that are produced by human activities, such as transportation, manufacturing, and energy production. Carbon offsets are created when a project is implemented to reduce or avoid carbon emissions, and the number of emissions that are avoided or reduced are then sold as offsets. These exist under voluntary programs as well as compliance markets. Voluntary offsets are employed by organizations to offset their emissions and attain their emission reduction targets, if any, while compliance markets are created by the mandatory national, regional, or international carbon reduction regimes. The carbon credits can be traded on a regulated exchange, creating a market-based mechanism for reducing emissions and promoting sustainable development.
This development is significant because it provides a framework for the creation of a domestic carbon market in India. This market has the potential to attract investment, promote innovation, and support the development of sustainable infrastructure in the country. Additionally, a domestic carbon market can help India meet its climate targets under the Paris Agreement and demonstrate its commitment to tackling climate change on a global level.