India establishes National Designated Authority for carbon market

The Ministry of Environment, Forest and Climate Change has officially notified the creation of a National Designated Authority (NDA)—a critical institutional requirement under the Paris Agreement (2015) to enable a structured carbon emissions trading regime in India.

According to the notification issued by the Union Environment Ministry, the authority will be a 21-member body chaired by the Environment Secretary, with representation from key ministries including External Affairs, Renewable Energy, Steel, and NITI Aayog. The Environment Ministry will have the maximum representation.

The move follows the adoption of Article 6 of the Paris Agreement, which lays down the global rules for carbon markets, at COP-29 held in Baku, Azerbaijan last year. Article 6, that has been a point of contention among negotiating countries, finally established the contours for international carbon trading mechanisms.

Establishing the NDA now provides India with the institutional machinery needed to engage in global carbon trade and to design domestic frameworks tailored to national priorities.

Key responsibilities of NDA would be:

• Recommending eligible activities for trading emission reduction units under Article 6.
• Periodically revising the scope of activities in line with India’s sustainable development goals and national priorities.
• Evaluating, approving, and authorising projects for carbon trading.
• Overseeing the use of emission reduction units to meet India’s Nationally Determined Contributions (NDCs).

India’s NDC targets are ambitious: reducing the emissions intensity of GDP by 45% by 2030 (from 2005 levels), achieving 50% of installed electric power capacity from non-fossil fuel sources, and creating an additional carbon sink of 2.5–3 billion tonnes of CO₂ equivalent through afforestation and reforestation by 2030.

For India, carbon markets are not just a compliance mechanism but a strategic economic and climate opportunity. They provide a platform for Indian industries and renewable energy developers to monetise low-carbon initiatives through the generation and sale of carbon credits.

With the NDA in place, India can participate in global trading mechanisms, attracting foreign investment into clean energy, energy efficiency, and carbon capture projects.

As the world’s third-largest emitter, India’s proactive participation in carbon trading frameworks signals a strong commitment to climate leadership while balancing the imperatives of growth, energy security, and sustainability.