India’s Carbon Credit Trading Scheme may raise over $500 bn by 2050

India’s Carbon Credit Trading Scheme (CCTS) has the potential to generate more than USD 500 billion in domestic revenue by 2050, creating a major financing source for the country’s clean energy transition while supporting industries and communities dependent on fossil fuels, according to a new report released by the Asia Society Policy Institute (ASPI).
The report, Carbon Credit Trading Scheme & Energy Transition Finance: Preparing India for Optimal Use of Compliance CCTS Revenue, highlights that India’s shift toward a low-carbon economy will require substantial investment to decarbonise energy-intensive industries while ensuring a fair transition for workers, coal-dependent states, and local economies.According to the study, the Carbon Credit Trading Scheme, launched in 2025 as a key pillar of the Indian Carbon Market, presents an opportunity to raise significant domestic resources through the auctioning of emission allowances. The report notes that auctioning permits for the power sector alone could generate more than USD 500 billion by 2050, with the proceeds channelled into industrial decarbonisation, clean energy projects, energy efficiency initiatives, and social transition programmes.
The report, authored by Nishtha Singh, Assistant Director of Climate at ASPI, and Alistair Ritchie, Director of Asia-Pacific Sustainability at ASPI, argues that India requires a robust financing architecture capable of balancing climate goals with economic resilience."India’s transition toward a low-carbon economy requires a financing architecture capable of supporting deep industrial decarbonisation, strengthening economic resilience in fossil fuel-dependent regions, and ensuring a just and equitable clean energy transition," the authors said. "The Carbon Credit Trading Scheme offers a significant opportunity to mobilise domestic revenue at scale while advancing India’s climate commitments and safeguarding industrial competitiveness."
Drawing on international experience, the report notes that well-designed emissions trading systems have become major revenue generators for governments. It cites the European Union Emissions Trading System (EU ETS), which has raised nearly USD 297 billion by 2025 through allowance auctions, with revenues largely reinvested in climate-related initiatives.To maximise the benefits of India's carbon market, the report proposes a CCTS-enabled Energy Transition Finance Mechanism comprising two dedicated funds. The Power and Industrial Decarbonisation Fund would finance clean technologies across the power and industrial sectors, while providing targeted support for micro, small and medium enterprises (MSMEs) and industrial clusters in coal-dependent regions.
The second proposed fund, the State Social and Economic Transition Fund, would help states heavily reliant on fossil fuels finance workforce reskilling, economic diversification, MSME development, community infrastructure, and the repurposing of coal mines and coal-fired power plants.The report also recommends establishing an Independent Energy Transition Finance Authority under the Ministry of Finance to oversee revenue allocation, coordinate with central and state governments, industry, financial institutions, and civil society, and ensure transparent governance. A Technical Advisory Committee has also been proposed to guide project selection, monitor fund utilisation, and periodically review funding priorities.The study outlines a phased implementation roadmap under which CCTS revenues could begin flowing to transition projects by 2031, with the possibility of advancing revenue mobilisation to 2029 if implementation progresses faster. According to the report, a transparent and predictable financing framework would not only accelerate India's industrial decarbonisation but also help ensure that the benefits of the clean energy transition are shared equitably across regions and communities.