Delhi Government Approves Carbon Credit Monetisation Policy
The Delhi government has taken a significant step toward fighting air pollution. On Tuesday, officials announced approval for a new carbon credit monetisation framework. This policy will allow the government to generate revenue by selling carbon credits in international markets. These credits come from reducing emissions through various environmental projects.
However, the government has not shared many details publicly. The exact framework, implementation timeline, and specific procedures remain unclear. This lack of transparency leaves questions about how and when the policy will actually work.
Understanding Carbon Credits
A carbon credit represents one tonne of carbon dioxide that gets reduced, avoided, or removed from the atmosphere. Projects that cut emissions create these credits. For example, if the government launches a tree plantation project that cuts 10 tonnes of carbon, it earns 10 carbon credits.
The government can then sell these credits in carbon markets to companies. Businesses often buy credits when they struggle to meet their own emission reduction targets. By purchasing credits, companies can claim they have met environmental goals without directly reducing their own emissions.
Vaibhav Chaturvedi, a Senior Fellow at the Council on Energy, Environment and Water, explains the principle. "Decarbonisation is an expensive process. Governments or companies have limited funds. Electric buses cost more than diesel buses, but they help the environment. Carbon trading makes these green activities financially viable," he says.
How Carbon Markets Function
Carbon markets operate globally, nationally, and locally. Companies or governments buy credits voluntarily for Corporate Social Responsibility or to comply with regulations. With emission reduction targets becoming common, many players need credits to meet standards.
The World Bank reports about 80 carbon trading regimes exist worldwide. Some systems come from international non-profits, while governments establish others. India is currently developing its own carbon market.
Private third-party firms audit and verify carbon reduction projects. These accredited organizations ensure reductions are real and measurable.
Carbon credit prices vary widely. Trishant Dev, Deputy Programme Manager for Climate Change at the Centre for Science and Environment, notes in a report that credit values range from $1 to over $100. Market dynamics determine the exact price.
The World Bank's 2025 report shows significant growth in carbon pricing. It now covers 28% of global emissions, up from just 5% in 2005. Carbon pricing revenues exceeded $100 billion in 2025 alone.
Delhi's Specific Policy Approach
The Delhi government plans to use several activities to generate carbon credits. These include:
- Operating electric buses
- Conducting plantation drives
- Promoting solar energy
- Improving waste management
Officials will scientifically measure emission reductions from these initiatives. They will register the reductions as carbon credits and sell them in national and international markets. All revenue will go to the state's Consolidated Fund.
The Environment Department will select a specialized agency to handle documentation and registration. The model uses revenue-sharing with no upfront government costs.
Chaturvedi highlights Delhi's pioneering role. "Delhi is one of the first states to approve such a policy. Maharashtra approved a similar policy four or five months ago. This mechanism creates direct financial incentives for governments to reduce carbon emissions," he says.
The policy comes after public protests demanded action on Delhi's severe air pollution. Residents have long sought effective measures to improve air quality in the capital city.
