What greenhouse gas emissions are
Greenhouse gases (GHGs) are gases that trap heat in the Earth's atmosphere by absorbing and re-emitting infrared radiation. The primary GHGs relevant to climate change are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and the fluorinated gases - hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3). Each gas has a different warming effect per unit of mass and a different residence time in the atmosphere.
The concept of global warming potential (GWP) was developed to allow comparison across gases on a common scale. By convention, GWP is expressed relative to CO2 over a 100-year time horizon (GWP100). Under IPCC AR6 values, methane has a GWP100 of approximately 29.8, meaning one tonne of methane has the same 100-year warming effect as approximately 29.8 tonnes of CO2. Nitrous oxide has a GWP100 of approximately 273. Fluorinated gases have GWP100 values ranging from hundreds to tens of thousands.
The unit tonne of CO2 equivalent (tCO2e) is used throughout carbon markets and emission accounting to aggregate different gases onto a single scale. When a carbon credit represents one tCO2e, it may represent one tonne of CO2, or a smaller quantity of methane, nitrous oxide, or another gas, each multiplied by its GWP100 factor. Methodology selection of GWP values matters: older methodologies used IPCC AR4 GWP100 values, while newer methodologies use AR5 or AR6 values, which differ for several gases. A cookstove project that displaces biomass combustion and avoids methane production may have its credit volume materially affected by which GWP value its methodology specifies for methane.
CO2 is the dominant GHG by cumulative atmospheric concentration and long-term warming impact. However, methane's short atmospheric lifetime (approximately 12 years versus centuries for CO2) and high near-term warming effect have made it a priority target for near-term climate action. This is reflected in the growing number of methane-focused carbon credit methodologies, including projects targeting coal mine methane, livestock methane, and landfill gas.
The major sources of GHG emissions globally
Global GHG emissions from all sources reached approximately 57 GtCO2e in 2024 according to the Global Carbon Project and UNEP Emissions Gap Report. The dominant sources break down across sectors that the carbon credit market addresses with varying degrees of coverage and quality.
Energy is the largest sector, responsible for approximately 73% of global GHG emissions when electricity and heat generation, transportation, buildings, and industry are aggregated. Within energy, coal combustion is the single largest source of CO2 globally, contributing approximately 14 GtCO2 in 2024. Natural gas combustion adds approximately 7 GtCO2. The power sector's transition away from fossil fuels is the primary lever for long-run CO2 reduction, and is the origin of the renewable energy carbon credit category.
Agriculture, forestry, and other land use (AFOLU) contribute approximately 18-22% of global emissions depending on how land-use change is accounted. Agriculture's methane from livestock and rice cultivation, nitrous oxide from fertilisers, and CO2 from land conversion are all addressed by carbon credit methodologies. The forestry sector is both a major source (through deforestation and degradation) and a major sink (through afforestation, reforestation, and improved forest management), making REDD+ and forestry credits among the highest-volume categories globally.
Waste contributes approximately 3-4% of global GHG emissions, primarily through methane generated in landfills and wastewater treatment facilities. Landfill gas capture and flaring projects have a long history in the voluntary carbon market. Composting and biogas generation from organic waste are also creditable activities.
Industrial processes, separate from energy use within industry, contribute fluorinated gases and process CO2 from cement, steel, and chemical production. Industrial carbon capture is a growing project category, though volumes remain small relative to sector emissions.
For India specifically, the sectoral mix differs from the global average. India's energy sector, while still dominant, shares a higher proportion of the emission profile with agriculture than is typical for high-income economies. India's livestock population - the world's largest by some measures - is a major source of enteric fermentation methane. India's coal mining sector is a source of fugitive methane. And India's rapidly expanding urban infrastructure is driving construction-related process emissions in cement and steel.
The Greenhouse Gas Protocol: Scope 1, 2, and 3
The Greenhouse Gas Protocol (GHG Protocol), published by the World Resources Institute and the World Business Council for Sustainable Development, is the most widely used corporate emission accounting standard globally. Its corporate accounting standard, first published in 2001 and updated in 2015, defines the scope categories that are now foundational to all corporate climate disclosure.
Scope 1 emissions are direct emissions from sources owned or controlled by the reporting organisation. These include combustion of fossil fuels in company-owned boilers and vehicles, process emissions from chemical reactions in manufacturing, and fugitive emissions from equipment leaks. Scope 1 emissions are directly within the organisation's operational control and are generally the most straightforward to measure.
Scope 2 emissions are indirect emissions from the generation of purchased electricity, heat, or steam consumed by the reporting organisation. Because the emissions occur at the power plant rather than at the user's facility, they are described as indirect. Scope 2 emissions are significant for organisations with high electricity consumption - technology companies, data centres, aluminium smelters, and manufacturers. The GHG Protocol's Scope 2 Guidance allows two accounting methods: the location-based method (using the average grid emission factor) and the market-based method (using supplier-specific or contract-specific emission factors). The distinction matters for renewable energy certificate and power purchase agreement accounting.
Scope 3 emissions are all other indirect emissions in the value chain, both upstream and downstream. The GHG Protocol identifies 15 Scope 3 categories, including purchased goods and services, capital goods, fuel and energy-related activities, transportation and distribution, waste, business travel, employee commuting, investments, and use and end-of-life treatment of sold products. Scope 3 emissions typically represent 70-90% of an organisation's total emission footprint, making them the most significant category for comprehensive climate action but also the most challenging to measure and reduce.
For carbon credit markets, Scope 3 is significant because it drives corporate demand for credits to address supply chain and product use emissions that the buyer cannot directly control. A food company addressing Scope 3 emissions from agriculture may seek credits from Indian soil carbon or cookstove projects in its supplier communities. A financial institution addressing Scope 3 financed emissions may seek credits from Indian forestry or renewable energy projects in its lending portfolio regions.
How GHG emissions are measured and reported
GHG emissions are measured through a combination of activity data and emission factors. Activity data represents the quantity of the emission-generating activity - litres of fuel combusted, tonnes of cement produced, hectares of forest cleared. Emission factors represent the quantity of GHG emitted per unit of activity - kg of CO2 per litre of diesel, tCO2 per tonne of cement clinker, tCO2 per hectare of forest cleared.
For most stationary combustion sources, activity data comes from fuel purchase records and metering, while emission factors come from standardised tables published by the IPCC, national inventory agencies, or fuel suppliers. For process emissions in cement and steel, activity data comes from production records and emission factors from process chemistry. For land-use change, activity data comes from remote sensing and ground surveys, while emission factors come from forest carbon stock assessments.
National GHG inventories are prepared by governments following IPCC guidelines and submitted to the UNFCCC. These inventories use a tiered approach: Tier 1 uses default IPCC emission factors; Tier 2 uses country-specific emission factors; Tier 3 uses direct measurement or modelling. Higher tiers generally produce more accurate results but require more data and capacity. India's national inventory submission, which covers data through 2016 as of early 2026, uses a mix of tier levels depending on the sector and data availability.
Corporate GHG accounting for listed companies in India is now required under SEBI's BRSR framework. The BRSR Core indicators include absolute Scope 1 and 2 emissions with third-party assurance requirements. Scope 3 reporting is encouraged but not yet mandated for the full 15 categories. The MCA's Business Responsibility Reports, which preceded BRSR, included energy and emission disclosures but without the rigour and verification requirements of the current framework.
Project-level monitoring for carbon credits uses methodology-specific measurement approaches. A forestry project measures carbon stocks through plot-based biomass surveys combined with allometric equations. A cookstove project measures fuel displacement through household energy assessments and kitchen performance tests. A renewable energy project uses certified generation meters and grid emission factors. The quality of project-level monitoring is one of the primary determinants of credit quality, and is a major focus of V4's rating methodology.
Trends in global GHG emissions through 2025
Global GHG emissions reached a new record in 2024 according to the Global Carbon Project, driven by continued growth in fossil fuel combustion, particularly in Asia, and by elevated land-use change emissions from South America. Despite the rapid growth of renewable energy globally, absolute emissions from the energy sector continued to rise because demand growth outpaced clean energy addition in many regions.
CO2 emissions from fossil fuels grew by approximately 1.1% in 2024, a smaller rate of increase than in the post-COVID rebound years of 2021 and 2022, but still a record absolute level. The trajectory is inconsistent with the Paris Agreement's 1.5 degree pathway, which requires global emissions to peak before 2025 and decline steeply thereafter.
Methane emissions have attracted increasing attention following a post-2019 anomalous rise in atmospheric CH4 concentrations. The causes are debated among climate scientists, with livestock, fossil fuel operations, and tropical wetlands all implicated. The Global Methane Pledge, signed by more than 150 countries at COP26, commits to a 30% reduction in methane emissions by 2030 relative to 2020 levels. Carbon credit projects targeting methane - landfill gas, coal mine methane, livestock methane, and biogas - are positioned to benefit from this focus.
Land-use change emissions remain high and variable year to year, dominated by deforestation in tropical regions. The Amazon, Congo Basin, and Southeast Asian forests are the dominant sources. India is not a major source of land-use change emissions in the global context - its forest cover has been increasing marginally according to FSI data - but Indian forest carbon projects must account for deforestation pressures from agriculture expansion and firewood collection in their permanence assessments.
Removals are growing but remain small relative to the scale of global emissions. Natural land and ocean sinks remove approximately 9-10 GtCO2 equivalent per year, roughly offsetting about 16% of gross anthropogenic emissions. Technological removals - direct air capture, enhanced weathering, bioenergy with carbon capture and storage (BECCS) - are growing from a near-zero base but are not yet at scale. The carbon credit market for removals is expanding, with durable removal credits commanding significant price premiums over avoidance credits.
Reduction pathways: science-based targets, net zero, removals
Science Based Targets are emission reduction targets set in alignment with climate science, specifically with the emission pathways required to limit global warming to 1.5 or 2 degrees Celsius above pre-industrial levels. The Science Based Targets initiative (SBTi) has established corporate and sectoral standards for what constitutes a science-based target, and validates corporate targets against these standards. As of early 2026, more than 9,000 companies globally have committed to or set SBTi targets, including a growing number of Indian companies.
Under SBTi's Corporate Net-Zero Standard, companies must achieve near-term targets (typically 2030 or 2035 targets that cover at least 50% of Scope 1, 2, and 3 emissions) and long-term net-zero targets (by 2050 or earlier, covering all significant emission sources). Carbon credits can only be used to address "residual" emissions - the portion that cannot be eliminated with available technologies - and must be high-quality permanent removals rather than avoidance credits for the final net-zero claim.
Net zero as a corporate claim has become ubiquitous but inconsistently defined. The SBTi standard provides the most rigorous corporate definition: all Scope 1, 2, and 3 emissions reduced to residual levels, with remaining residuals neutralised by permanent removals. Other frameworks, including ISO 14068 and various national guidance documents, define net zero with varying scope boundaries and credit use provisions. The proliferation of definitions creates greenwashing risk for buyers making net-zero claims and is one driver of demand for independent quality assessment of the credits used in such claims.
Carbon removal is increasingly recognised as a necessary component of any credible net-zero pathway. Removals include both biological removals (forests, soils, blue carbon, biochar) and technological removals (direct air capture, enhanced weathering). For India, the most scalable near-term removal categories are forestry and soil carbon. The longer-term potential of blue carbon is significant if methodology and regulatory gaps can be resolved.
The role of carbon markets in GHG reduction
Carbon markets serve as a mechanism to direct capital toward emission reduction and removal activities at least cost. By creating a tradeable commodity - the carbon credit - representing one tonne of CO2 equivalent reduced or removed, markets allow emitters to pay for reductions wherever they are cheapest, while project developers earn revenue to fund activities that would otherwise lack a commercial incentive.
The voluntary carbon market reached approximately USD 2 billion in transaction value in 2024 according to Ecosystem Marketplace. Indian projects represented approximately 8-10% of global voluntary market volume by credit count, reflecting India's position as the third-largest source of carbon credits globally.
Market criticisms have intensified following a series of investigative findings in 2023-2025. Investigative journalism, academic studies, and registry reviews identified over-crediting in cookstove programmes, questionable additionality in renewable energy projects, and inflated forest carbon baselines in several REDD+ programmes. These findings led to significant market disruption, credit price declines in affected categories, and accelerated development of quality standards.
The ICVCM Core Carbon Principles, launched in 2023 by the Integrity Council for the Voluntary Carbon Market, represent the market's most significant quality-standardisation effort. The CCP framework assesses credit categories against standards for governance, emissions impact, and sustainable development. Several Indian project type categories are under ICVCM assessment as of early 2026. Categories that receive CCP approval will carry an additional quality signal in international markets.
For India specifically, carbon markets play a role in funding clean energy, forest conservation, and household energy transition activities that have development co-benefits beyond the climate value of the credits themselves. Cookstove projects reduce indoor air pollution. Biogas projects displace firewood and improve household health. Forestry projects protect biodiversity and watershed services. These co-benefits are increasingly part of how buyers value Indian credits, and are a dimension that V4's rating framework explicitly assesses.
Frequently asked questions
Q: What is the difference between a tonne of CO2 and a tonne of CO2 equivalent?
A tonne of CO2 refers specifically to carbon dioxide. A tonne of CO2 equivalent (tCO2e) is a unit that expresses the warming effect of any greenhouse gas in terms of the equivalent amount of CO2, using global warming potential (GWP) conversion factors. One tonne of methane, for example, equals approximately 29.8 tCO2e using IPCC AR6 GWP100 values. Carbon credits are always denominated in tCO2e to allow comparison across different gas types.
Q: Why do different sources report different emission figures for the same country?
Different databases use different data sources, boundary definitions, emission factors, and GWP values. For India, the national inventory submission to the UNFCCC covers data only through 2016, while more current estimates are assembled from sector-level data with varying methodological approaches. Global datasets like EDGAR and the Global Carbon Project use harmonised methodologies that may differ from India's own national inventory methodology. These differences are not errors but reflect legitimate methodological choices.
Q: How are Scope 3 emissions relevant to carbon credit procurement?
Scope 3 emissions represent the majority of most companies' climate footprints but are the hardest to reduce directly. Companies with Scope 3 reduction commitments often use carbon credits to demonstrate progress on supply chain and value chain emissions while they work on structural Scope 3 reduction measures. The relevance to Indian credits is that many supply chain emission reduction activities - agricultural soil carbon, cookstoves in supplier communities, renewable energy in manufacturing regions - can generate credits that correspond directly to a buyer's Scope 3 emission sources.
Q: What does "additionality" mean in the context of GHG emission reductions?
Additionality means that the emission reduction or removal would not have occurred without the carbon credit revenue. A project is additional if it goes beyond what would happen in a business-as-usual scenario - either because it is not legally required, or because it is not financially viable without carbon revenue. Additionality is one of the foundational quality criteria for carbon credits and is a major source of controversy in categories where regulatory or market conditions make many activities commercially viable regardless of carbon revenue.
Q: How does the GHG Protocol treat carbon credits in corporate accounts?
Under the GHG Protocol corporate standard, carbon credits (carbon offsets) are not deducted from gross emission inventories when calculating Scope 1, 2, or 3 emissions. Instead, credits are reported separately as an offset or neutralisation claim. This treatment ensures that reported emission inventories reflect actual emissions and are not obscured by offset purchases. The separation of gross emissions from offset claims is important for transparency and comparability of corporate emission reporting.