The Indian Carbon Market became fully operational in January 2025, representing the most ambitious market-based instrument for emissions control in the Global South.
India’s development trajectory in 2025 sits at the intersection of climate justice, energy transition, and sustainable growth. As the world’s most populous nation and its third-largest emitter of greenhouse gases, India holds the power to significantly influence global climate outcomes while shouldering the responsibility of addressing extreme poverty, expanding infrastructure, and delivering energy access to 1.4 billion people. This 2025 Mid-Year Emissions Report Card evaluates the changes in India’s emissions data, effectiveness of its climate policies, and trends in fossil fuel use and renewable energy adoption in the first half of the year, providing a country rating based on progress across these key dimensions.
India’s growth in greenhouse gas emissions appears to be slowing, indicating the early impacts of mitigation policies and structural shifts in the economy. The Ministry of Environment, Forest and Climate Change (MoEFCC) estimated that GHG emissions for 2024 stood at approximately 3.35 billion tonnes of CO₂-equivalent, representing a modest increase of 1.9% over the previous year. More notably, data from Q1 2025 shows an emissions growth rate of just 0.3%, suggesting that India may be entering a phase of emissions plateau. This slowdown can be attributed to a decline in the coal generation share, which fell to 64.2% in Q1 2025 from 70% in 2023, the expansion of renewable energy capacity with over 15 GW added in the last six months, and improvements in industrial energy efficiency under the PAT Scheme.
The power sector remains the largest emitter, but its share of total emissions is shrinking. According to the Central Electricity Authority, absolute emissions from coal power declined by 4% due to the early retirement of inefficient units and improved load factors for renewable energy sources. Transport emissions remain high but stable, with EV uptake reaching 8.7% of new registrations and rising ethanol blending now at 13.2%. Agriculture shows that methane emissions from rice cultivation have decreased slightly due to pilot low-methane paddy cultivation schemes in Punjab, Odisha, and Tamil Nadu, which the ICAR supports. The waste sector is demonstrating improved waste segregation in urban municipalities under the Swachh Bharat Mission 2.0, which is beginning to reduce methane emissions from landfills. Despite these improvements, India’s per capita emissions still increased slightly to 2.6 tCO₂e, largely due to growing industrial output; however, this remains far below the global average of 6.3 tCO₂e.
The first half of 2025 witnessed the operationalization of several key national policies and the emergence of strong subnational climate leadership. The Indian Carbon Market became fully operational in January 2025, representing the most ambitious market-based instrument for emissions control in the Global South. With mandatory sectoral caps for 13 carbon-intensive industries under the Bureau of Energy Efficiency, the platform registered over ₹1,100 crore in carbon credit transactions in its first quarter. The system introduces enforceable emissions intensity targets and tradeable Emissions Reduction Units for steel, cement, fertilizer, and thermal power sectors, with targets becoming stricter annually.
The National Green Hydrogen Mission (₹19,744 crore) experienced accelerated implementation in 2025, with the commissioning of a 100 MW green hydrogen project in Gujarat, marking the largest in Asia. Policy alignment by state governments, including Maharashtra, Karnataka, and Odisha, resulted in state-specific green hydrogen roadmaps, while the MNRE announced a 35% increase in green hydrogen pilots for industrial decarbonization. The Energy Conservation Amendment Act took effect in January 2025, introducing mandatory energy audits and carbon trading infrastructure. As a result, over 200 large commercial buildings in metropolitan areas initiated retrofits, and the Bureau of Energy Efficiency reported a 15% increase in energy savings from buildings.
The extension of the FAME-II scheme with enhanced subsidies for commercial EVs contributes to India’s clean mobility shift, with EV penetration reaching 8.7% of new vehicles and over 10,000 electric buses being deployed under the PM e-Bus Seva scheme. The charging infrastructure has expanded to over 20,000 public charging stations nationwide, with states like Delhi, Maharashtra, and Kerala emerging as leaders in electric mobility adoption. Subnational climate action shows Tamil Nadu releasing its updated SAPCC and launching the Tamil Nadu Climate Mission 2.0, Gujarat creating an emissions inventory tool with a carbon budgeting pilot in Bharuch. Himachal Pradesh and Uttarakhand expanding community-based afforestation programs.
India’s energy transition story in 2025 is marked by rapid renewable energy deployment but persistent reliance on coal in certain regions. As of May 2025, India’s non-fossil fuel energy capacity stands at 249 GW, with solar power leading at 93 GW. The rooftop solar boom under the revamped PM Surya Ghar Muft Bijli Yojana saw 1.2 million households installing systems in just five months, while the revival of wind energy in Gujarat and Tamil Nadu included the repowering of old turbines and the issuance of new hybrid wind-solar tenders. Despite these successes, transmission infrastructure remains a bottleneck, with evacuation delays reported in Rajasthan, Andhra Pradesh, and Karnataka.
India continues to face challenges in phasing out coal, but the trend is clearly towards de-intensification, with 4.6 GW of old coal plants decommissioned in early 2025. The National Electricity Plan targets no new coal plants without CCS or hybrid systems post-2027, while Jharkhand and Chhattisgarh are conducting just transition studies for coal-reliant workers and districts. While India has not committed to phasing out coal under the Glasgow Pact, the government’s stated policy is to “phasing down” coal while ensuring energy security.
India earns a ‘B’ rating under the Climate Scorecard criteria, indicating that the country is actively moving forward with efforts to reduce emissions and promote sustainable energy. This rating is justified by policy progress through the operationalization of the Indian Carbon Market, Green Hydrogen Mission, and Energy Conservation rules, elevating India’s climate architecture, emission trends showing stabilization in GHG growth rates representing a potential turning point, and energy transition with renewables dominating new capacity additions and EVs being mainstreamed. However, challenges remain, as coal continues to account for the bulk of power generation, industrial and agricultural emissions are difficult to abate, and adaptation financing remains underdeveloped.
The first half of 2025 reveals that India is at a pivotal moment in its climate journey. While the country has made enormous strides in renewable energy, energy efficiency, and market-based mechanisms, the battle is far from over, as India’s emissions need to peak before 2030 to remain on track for net-zero by 2070. The government’s focus on equity, green job creation, technology adoption, and resilient infrastructure must be scaled up further, with particular attention to states that are lagging. International climate finance, technology transfer, and private sector innovation will be indispensable to accelerate India’s low-carbon transformation. India is demonstrating that development and decarbonization can be mutually reinforcing, especially when underpinned by strong institutions, decentralized governance, and inclusive climate policy, positioning the country to become a global leader in climate action on its terms and in alignment with the principles of climate justice.
This Post was submitted by Climate Scorecard India Country Manager, Ankita A. Padelkar.