NAVIGATING LEGAL COMPLEXITIES IN INDIA’S CARBON CREDIT MARKET: ISSUES AND PROSPECTS

AUTHOR – KOMAL MISHRA* & AKSHAY KUMAR*

* STUDENT AT UTTARANCHAL UNIVERSITY, LAW COLLEGE, DEHRADUN

**ASST. PROFESSOR AT LAW COLLEGE DEHRADUN

BEST CITATION – KOMAL MISHRA & AKSHAY KUMAR, NAVIGATING LEGAL COMPLEXITIES IN INDIA’S CARBON CREDIT MARKET: ISSUES AND PROSPECTS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (4) OF 2025, PG. 555-567, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

India’s carbon credit market is poised to become a pivotal component of its climate governance and sustainable development strategy. As the country advances toward its commitments under the Paris Agreement and seeks to achieve net-zero emissions by 2070, the establishment of a robust carbon trading system has become imperative. However, the legal and regulatory architecture underpinning this market is still in a nascent and evolving phase, characterized by ambiguity, institutional overlaps, and regulatory fragmentation. This paper undertakes a critical analysis of the legal complexities surrounding carbon credits in India, with an emphasis on the structural and procedural challenges that hinder effective implementation and enforcement.

The article first explores the existing regulatory framework, including recent legislative developments such as the Energy Conservation (Amendment) Act, 2022, and their implications for carbon trading. It then identifies legal and institutional bottlenecks, such as the absence of a unified carbon registry, lack of clarity in market mechanisms, and issues related to the verification and validation of emission reductions. The study also examines the role of private actors in voluntary carbon markets, and the emerging legal risks associated with private registries, cross-border transactions, and greenwashing claims.

Additionally, the paper contextualizes India’s domestic efforts within the broader international legal landscape, analyzing the compatibility of Indian mechanisms with Article 6 of the Paris Agreement and other global carbon market standards. Finally, it outlines the prospects for legal reform, highlighting pathways for harmonizing regulatory approaches, improving transparency, and fostering investor confidence.

Through a comprehensive legal lens, this study aims to contribute to the discourse on carbon market development in India by offering actionable insights and policy recommendations to create a credible, equitable, and efficient carbon credit ecosystem.

KEYWORDS – Carbon Credit Market, Environmental Law, Climate Policy, Paris Agreement, Regulatory Framework