Carbon Credit Potential in India’s Commercial EV Sector

The market opportunity for EVs in India is speculated to be around USD 31 billion by the year 2030, with a projected CAGR of more than 24 percent. If around 30 percent of the commercial fleets switch to electric, one estimate from ICCT suggests that India could generate 15-20 million carbon credit units a year.

November 07, 2025. By News Bureau

Tags:

articles

Sustainable transportation

The change towards clean mobility in India is picking up momentum like never before. Transportation contributes nearly a quarter of India's energy-related CO₂ emissions, making EVs not only a tool for sustainability, but a path to climate finance. And while innovative mechanisms for climate finance are starting to emerge, carbon credits may provide a true game-changer that enables climate finance for emission reduction in India's rapidly growing commercial EV sector.

Understanding the Opportunity

A carbon credit is equal to one metric ton of carbon dioxide (or equivalent greenhouse gases) avoided or reduced from the atmosphere. Historically associated with renewable energy or afforestation, carbon credits are now finding their place in the EV ecosystem. For every kilometer traveled with an electric vehicle compared to a fossil-fuel vehicle, there are emissions avoided that can be calculated, verified, and cashed out on the carbon market.

The commercial EV industry (including logistics, delivery, and corporate fleet) is professionally poised to take advantage of carbon credits; these larger businesses have libraries of voluminous, verifiable data related to the usage of each vehicle — like distance traveled or energy consumption. This data allows for accurate calculations of avoided emissions, this is the hinge point for carbon credits becoming a reality across vehicles.

The Market Potential

The market opportunity for electric vehicles in India is speculated to be around USD 31 billion by the year 2030, with a projected CAGR of more than 24 percent. If around 30 percent of the commercial fleets switch to electric, one estimate from the International Council on Clean Transportation (ICCT) suggests that India could generate 15-20 million carbon credit units a year.

At a lower-end carbon pricing of around USD 5-USD 10 per credit unit, this creates a market opportunity of USD 150-200 million a year, simply from emissions avoided. However, this also comes with benefits in terms of fulfilling sustainability and ESG reporting requirements for businesses, which provides a double lever for motivation and adoption.

The Roadblocks Ahead

Despite such a significant opportunity, the monetisation of carbon credit units in India’s EV ecosystem is still a work-in-progress. The major issue is related to standardisation and verification of carbon credit units. Fleet operators generally lack an integrated solution to capture real-time emissions saved per vehicle or route.

In addition, a national framework for the carbon credit units derived from EV’s has not been established by the Government of India, leading to an additional layer of complexity. While standards exist globally, such as Verra or Gold Standard, they tend to be expensive or convoluted for the smaller players.

The Role of Policy and Technology

Realising this potential will require a combination of policy reform and digital innovation. The government might embed carbon accounting into initiatives such as the PM E-Drive Initiative or under the National Carbon Market framework to provide clear baselines and emissions factors for fleets of zero-emission vehicles.

Additionally, AI-enabled telematics, blockchain, and IoT-based verification systems can provide traceable, verifiable, and tamper-proof emissions data to enhance credibility and reliability in both regulated and voluntary carbon markets while reducing certification timelines.

Corporates can also play a significant role by embedding carbon accounting into their mobility strategy, monitoring kilometers traveled, charging patterns, and types of renewable energy consumed to develop auditable datasets that can generate credits.

Aligning Profitability and Sustainability

Carbon credits offer a unique proposition to commercial EVs: they convert sustainability to tangible value. Fleet carbon electrification already generates 20–30 percent cost savings over fuel vehicles, with the additional ability to create tradable carbon assets leading to further increased profitability.

In the future, corporates seeking ESG-compliant mobility solutions will start to prefer partners who can quantify and validate their emission reductions.

Conclusion

The carbon credits opportunity in India's commercial EV sector represents an essential linking of clean technology with climate finance. With appropriate integration of policy, digital verification, and corporate action India will make every electric mile count in concrete progress to meeting its net-zero goals.

If implemented properly, monetising carbon credits will not only enhance financial sustainability for fleet operators but will also catalyse India's transition to decarbonised mobility, underpinned by data, where green transport is both environmentally and financially valuable.

- Abhinav Kalia, CEO and Co-founder at ARC Electric