Why is India creating a carbon market?

After the introduction of the Energy Conservation (Amendment) Bill, 2022—which aims to boost clean energy in India—Indian companies such as EKI Energy and Adani Group have come together to develop a carbon credits market. Carbon credits are permits allotted to companies to emit a particular amount of greenhouse gases. A company can emit one tonne a greenhouse gas with one carbon credit.

A company is allowed to buy carbon credits if it is unable to reduce its emissions or sell unused credits to another company if it has been successful in reducing emissions. The fund created by carbon credits are in turn used to finance climate-centric programmes.