By Ranjit Kulkarni, Vice-President and General Manager, Honeywell Process Technology
Industries are increasingly viewing carbon trading as a strategic lever for competitiveness, operational efficiency, innovation and access to environment-related finance. India emitted 4,371 kilo tonnes of carbon in 2024, with power generation and heavy industries responsible for nearly half of the total. This underscores the need for scalable and commercially feasible approaches to tackle emissions in hard-to-abate sectors.
Evolving carbon market landscape
India’s carbon credit market stood at $33.7 billion in 2025 and is projected to reach $405 billion by 2034. Carbon trading is now evolving into a major economic opportunity, not just an environmental measure. The country is gradually shifting from the perform, achieve and trade scheme to the carbon credit trading scheme (CCTS). With a framework like CCTS in place, companies will be able to generate and trade carbon credits based on verified emissions reductions. If implemented consistently, such frameworks could help build stronger trading ecosystems over time.
Recently, India expanded the CCTS to cover nine of the country’s most energy-intensive industries, including iron, steel, cement, and aluminium. Together, these industries generate hundreds of millions of tonnes of industrial emissions. The approach encourages cleaner output, giving the industry room to operate while keeping carbon reduction targets clear. Furthermore, India is strengthening its climate strategy by integrating the Green Credit Programme with the CCTS. In practice, this creates two incentive tracks: one rewards emission cuts (carbon credits), and the other rewards wider ecological actions (green credits). Compliance and voluntary mechanisms together create a layered carbon ecosystem. This will eventually broaden sectoral inclusion while improving credit diversity.
Technology as the catalyst
India’s policy landscape establishes the framework while technology delivers reach, precision, and trust. Key enablers include the existing monitoring, reporting, and verification (MRV) infrastructure, as the CCTS is built upon these systems. Centralised tracking, with Grid-India operating the online logs and tracking carbon credits end-to-end, complemented by blockchain-enabled records that link emissions data to the Grid-India registry, will ensure smoother compliance and reduce administrative friction. Additionally, next-generation digital and automation solutions, along with artificial intelligence models that can flag emission spikes in real time and suggest operational fixes, can help in this transition.
Beyond standardised MRV and AI, carbon capture technologies must adapt to site-specific factors like emission source location, end-user proximity, and utilisation purpose (for example, enhanced oil recovery or mineralisation), necessitating regional and industry-tailored solutions. Steel and cement, for example, prioritise on-site reuse to minimise transport costs and emissions. Together, these technologies help make data more reliable, improve transparency, and boost investor confidence.
The 2026 Union Budget set aside Rs 200 billion for carbon capture, utilisation, and storage (CCUS) initiatives that have fuelled excitement in hard-to-abate sectors. The steel sector is actively testing carbon capture technology to snag emissions and repurpose carbon emissions right in their production lines. Cement players, meanwhile, are capturing carbon and using it to make concrete and clinkers through mineralisation pilots and testbeds. These interesting efforts are still at their early stages of technology development and come with their own set of challenges, but government incentives are easing burden, enabling faster roll-out and driving real momentum. This further helps in reducing emissions from core industrial processes in hard-to-abate sectors. Faster CCUS investment can deliver durable, measurable reductions that fit seamlessly into the carbon credit market. For sectors such as energy, metals, including steel and aluminium, chemicals, and manufacturing, digital emissions analytics and predictive tools are transforming carbon management into a continuous operational discipline rather than a periodic reporting exercise.
Opportunities in the Indian context
Cement and aluminium sectors could generate surplus credits through relatively low-cost abatement measures. The European Union’s Carbon Border Adjustment Mechanism (EU CBAM) makes credible domestic carbon accounting more important than ever. As India aligns with digitally verifiable, high-integrity carbon credits, it would emerge as a preferred global supplier as buyers are increasingly demanding transparency under frameworks like the EU CBAM. A well-governed Indian carbon market could also unlock opportunities in a market that is estimated to reach $200 billion by 2030. As additional sectoral targets are notified and trading deepens, liquidity and price discovery mechanisms will determine how effectively the market channels capital into industrial carbon reduction.
