Why India's carbon credits trade at a fraction of Europe's price and what that means for exports

A tonne of carbon dioxide is the same molecule whether it is absorbed by a tree in Karnataka or Bavaria. Yet a carbon credit generated in India has traded on voluntary markets for as little as $2.35 per tonne, while the European compliance system prices it around €72. The EU has now set its border carbon price at €75.36 per tonne, meaning Indian exporters of steel, cement, and aluminium will pay European prices for the carbon embedded in their products. The gap is not just about market quality or regulation. It reflects a fundamental failure to value standing forests and natural capital in India's economic accounting. The article argues that India's national accounts assign zero value to a living forest. A forest only becomes GDP when it is cut down and sold as timber. This creates a system that rewards deforestation and ignores the carbon storage and ecosystem services that forests provide. The author calls for building a better carbon market with proper measurement and standards, where the value of a standing forest flows first to the communities who have protected it, often for centuries without formal title. The piece is worth reading for anyone tracking carbon market design, the EU's Carbon Border Adjustment Mechanism, or the intersection of climate policy and economic incentives in India. It raises hard questions about who benefits from carbon markets and how to avoid repeating past patterns of dispossession in the name of environmental finance.