The maritime sector has emerged as a key frontier in the global battle against climate change. With international shipping accounting for nearly 3% of global greenhouse gas emissions, the urgency to decarbonise is undisputed. Against this backdrop, the International Maritime Organization (IMO), the United Nations agency responsible for regulating shipping, adopted a revised GHG Strategy in July 2023. This strategy sets forth a net-zero emissions target for the sector by or around 2050, with interim checkpoints of at least a 20% reduction (striving for 30%) by 2030 and at least a 70% reduction (striving for 80%) by 2040, compared to 2008 levels. In March 2024, the IMO further released comprehensive Guidelines on the Life Cycle GHG Intensity of Marine Fuels, marking a significant shift towards the recognition of life cycle-based emissions accounting, moving beyond mere tailpipe (tank-to-wake) emissions to a broader well-to-wake methodology.
The well-to-wake approach now endorsed by the IMO includes upstream emissions associated with the production, processing, and transportation of marine fuels, in addition to emissions generated through combustion onboard vessels. This creates new legal, operational, and commercial implications for fuel producers, suppliers, and shipowners alike. Crucially, it opens up the possibility for countries that can produce low- or zero-carbon fuels sustainably to not only reduce emissions from their own maritime sectors, but also generate tradable surplus in the form of carbon credits.
India, with its abundant biomass potential, access to renewable energy, and growing hydrogen mission, is uniquely positioned to capitalise on this shift. The legal question that arises is whether India can monetise its maritime transition through carbon markets, both internationally under Article 6 of the Paris Agreement, and domestically under its recently introduced Carbon Credit Trading Scheme (CCTS), notified in June 2023. The answer lies in aligning maritime fuel innovations with robust verification mechanisms and ensuring regulatory convergence across domestic and international legal frameworks.
The CCTS, implemented under the Energy Conservation Act, 2001 as amended by the Energy Conservation (Amendment) Act, 2022, introduces a compliance-based carbon market in India. It provides for the issuance, trading, and surrender of carbon credit certificates (CCCs) by designated entities within notified sectors. The Bureau of Energy Efficiency (BEE), operating under the Ministry of Power, acts as the administrator, while the National Steering Committee for the Indian Carbon Market (NSCICM) provides overarching policy direction. The rules envisage the designation of sectoral targets and the development of methodologies to measure verified emissions reductions. In its current structure, the CCTS does not explicitly include maritime fuel producers or shipping operators within its scope. However, this regulatory gap may be bridged through appropriate amendments, designating marine fuel production or shipping services as obligated sectors or allowing voluntary participation through a mechanism of offset projects generating CCCs.
In parallel, India’s international obligations under the Paris Agreement offer another route for monetisation. Article 6.2 allows bilateral or multilateral cooperation between countries to transfer internationally transferred mitigation outcomes (ITMOs). Given that well-to-wake compliant marine fuel use can be accurately measured and verified, surplus emissions reductions resulting from the export of low-GHG intensity fuels from India could qualify as ITMOs. These ITMOs, if transacted under authorised bilateral arrangements, could yield foreign exchange earnings and enhance India’s role as a global green fuel hub. This pathway, however, requires India to establish corresponding adjustments in its national inventory and ensure that the projects conform to environmental integrity, transparency, and additionality standards.
Operationalising either the CCTS or the Article 6.2 pathway for maritime decarbonisation requires several legal and institutional enablers. First, there is a need to formally recognise marine fuel production and bunkering as a distinct sector under the CCTS. The BEE must develop methodologies to assess the life cycle emissions of various fuels, aligned with the IMO’s 2024 Guidelines. Second, the regulatory architecture must ensure independent third-party verification of GHG reductions. This may involve accreditation of verification agencies and creation of digital MRV (monitoring, reporting and verification) platforms. Third, the carbon intensity of fuel must be traceable through the supply chain. A statutory obligation to maintain fuel passports or lifecycle carbon intensity certificates may be imposed under national law.
Further, legislative reform must accompany these steps. The Indian Ports Act, 1908 and the Merchant Shipping Act, 1958 currently make no reference to lifecycle emissions or GHG traceability obligations. A maritime-specific law, or amendments to these statutes, may be considered to create enforceable obligations on fuel suppliers, shipowners, and port authorities. Such a legal framework would support India’s export of green fuels by ensuring international buyers of the credibility of India’s MRV ecosystem. Equally, such a framework would support India’s compliance with incoming regulations like the EU FuelEU Maritime regulation, which places lifecycle emissions requirements on vessels calling at European ports.
India must also develop a port-based infrastructure to support this vision. The availability of green bunkering facilities, digital verification platforms, and independent GHG laboratories is critical. Flagship national initiatives like the Maritime India Vision 2030 and Gati Shakti Master Plan must be recalibrated to integrate green fuel supply chains, including incentives for producing biofuels, green methanol, and hydrogen-based fuels at coastal industrial clusters. These initiatives must work in tandem with the National Green Hydrogen Mission, leveraging concessional finance and viability gap funding for setting up integrated green maritime fuel zones.
At the international level, India must assert its voice in forums such as the IMO’s Marine Environment Protection Committee to shape methodologies and definitions that favour its domestic strengths, such as biomass-derived fuels. It must also establish Article 6.2 bilateral arrangements with shipping-dependent countries or trading partners seeking low-carbon shipping alternatives. Such partnerships can help de-risk investments and create a steady demand pipeline for Indian fuels. Carbon credit revenues derived from such exports can in turn be used to cross-subsidise domestic fleet transition and reduce compliance costs for Indian shipowners.
Thus, India’s maritime decarbonisation offers not just a regulatory challenge but a strategic opportunity. With the right alignment of legal frameworks, verification ecosystems, and infrastructure policy, India can emerge not only as a compliant participant in a greener shipping future but also as a carbon credit exporting powerhouse. By monetising emissions savings through the CCTS and Article 6.2, India can place itself at the centre of the global maritime energy transition, converting compliance into competitive advantage.
(This post has been authored by Tejas Hinder, an associate at Cyril Amarchand Mangaldas and an editor at TCLF)
CITE AS: Tejas Hinder, ‘’ (The Contemporary Law Forum, 5 May 2025) <https://tclf.in/2025/05/05/carbon-credits-from-shipping-can-india-monetise-its-maritime-transition-?/>date of access.