Carbon Credit Plan Faces Hurdles In Delhi EV Policy

Delhi Government's decision to grant carbon credits to electric vehicle (EV) customers under its EV Policy 2.0 has set off a controversy among industry players, who are questioning the policy's complexity and viability. Intended to promote the use of tailpipe-emission-free cars, the proposal has so far failed to provide clarity on a range of issues like methodology, trading procedures, and valuation of carbon credits.

The policy suggests that owners of EVs, through preventing carbon emissions of conventional fuel-based cars, ought to accrue carbon credits, which are then able to be sold. But just how this is to be done—generated and profited from—is unclear. Experts indicate various challenges, such as uncertainty in methodology, lack of price guarantee, and no existing markets for trading by individual EV users.

Vaibhav Chaturvedi of the Council on Energy, Environment and Water (CEEW) is in favor of the scheme in principle but emphasizes that its economic viability for the consumer is doubtful. He points out that although the credits might trade at ₹1,000 to ₹1,800 per tonne of CO2, the average savings per vehicle is about 0.5–2 tonnes per year—providing scant financial incentive.

Industry observers such as Primus Partners' Nikhil Dhaka forecast meager revenues of carbon credits, which could be ₹20,000 crore, but accept the fact that the mechanism to link EV users with carbon markets is still underdeveloped. Experts opine that credit distribution would be more effective if credited to the manufacturers or centrally by the government.

International comparisons, such as California’s system where charging companies earn credits, indicate alternative models that might work better. But in India’s case, without a robust mechanism, the implementation could falter.

Despite the ambition behind the initiative, stakeholders in Delhi’s EV sector are awaiting clearer guidelines from the transport department. Until then, the true potential of carbon credits as a motivator for EV adoption remains clouded by policy and execution gaps.