Carbon Credits as Market-Based Instruments for Climate Mitigation: Global Trends, Challenges, and Policy Perspectives for India

Carbon credits have become important as a result of efforts to reduce climate change by reducing greenhouse gas (GHG) emissions. Carbon credits represent a way to incentivize individuals and companies to reduce their GHG emissions by providing financial rewards for doing so. The value of carbon credits has increased in recent years due to the growing awareness of the need to reduce GHG emissions and the implementation of regulations, such as the Paris Agreement, that aim to limit global warming. As more companies and governments commit to reducing their carbon footprint, the demand for carbon credits is expected to increase further. Carbon credits also offer an opportunity for sustainable development, as the projects that generate them often involve renewable energy, reforestation, or other environmentally beneficial activities. This has led to the creation of new markets and investment opportunities in the renewable energy and sustainable development sectors. Overall, carbon credits have become important in the global effort to address climate change by providing a market-based incentive for reducing GHG emissions and promoting sustainable development. In this review paper, the major needs and future scope of carbon credit have been explained in order to understand its global requirement and how it would help in saving the environment at large. There could be certain problems as well in mandating the carbon credit in India which are explained in the research article. Also, the prospective policies have been highlighted which would help in making the carbon credit a mandate for developing countries like India. The goal of the carbon credit system is to provide economic incentives to encourage the reduction of greenhouse gas emissions, which contribute to climate change. By putting a price on carbon, organizations and individuals are motivated to reduce their emissions and invest in more sustainable practices but there are certain concerns as well which include the effectiveness of certain projects, the potential for fraud and abuse, and the lack of regulation and oversight in some markets. Overall, the use of carbon credits remains a controversial issue, but it is one of many tools that can be used to address climate change. Key Words: Climate change, regulations of carbon credit, renewable energy, energy efficiency, sustainable development